Practice Test

Q1) The term 'EVA' is used for: Show Answer

Q2) The New York based financial advisory _____ postulated a concept of economic value added. Show Answer

Q3) If a company's EVA is negative - Show Answer

Q4) Cost of equity share or debt is called: Show Answer

Q5) Corporate Financial Reporting c ontains:
(1) Qualitative information
(2) Quantitative information
Select the correct answer from the options given below -
Show Answer

Q6) Cost of capital is equal to required return rate on equity in case if investors are only - Show Answer

Q7) Corporate Financial Reporting may be defined as - Show Answer

Q8) Which of the following model/method makes use of beta (?) in calculation of cost of equity? Show Answer

Q9) A corporate balance sheet is also known as: Show Answer

Q10) The cost of equity share or debt is called specific cost of capital. When specific costs are combined, then we arrive at - Show Answer

Q11) Which of the following method can be used by listed company for preparation of Cash Flow Statement? Show Answer

Q12) EVA = ? Show Answer

Q13) A business may incur an operating loss in a given financial year yet has more cash in the bank at the end. A reason for this could be that: ………. Show Answer

Q14) Assertion (A):
Cost of share capital would be based upon the expected rate of earnings of a company.
Reason (R):
Each investor expects a certain amount of earnings, whether distributed or not from the company in whose shares he invests.
Select the correct answer from the options given below:
Show Answer

Q15) All of the following are true regarding the cash flow statement except ….. Show Answer

Q16) If we deduct ‘risk free return' from ‘market return' and multiply it with 'beta factor' and again add ‘risk free return', the resultant figure will be Show Answer

Q17) All of the following are true regarding the purpose of the statement of cash flows except ….. Show Answer

Q18) How you will calculate expected dividend i e. dividend at the end of year one? Show Answer

Q19) Risk free rate is subtracted from expected market return is considered as: Show Answer

Q20) Assertion (A):
Cash flow statement enhances the comparability of report.
Reason (R):
Cash flow statement eliminates the effect of using different treatments for same transactions.
Select the correct answer from the following —
Show Answer

Q21) How the economic value added (EVA) is calculated? Show Answer

Q22) Arrange the following categories of cash inflows and cash outflows in the correct order of cash flow statements:
(1) Cash flows from investing activities
(2) Cash flows from financing activities
(3) Cash flows from operating activities. Select the correct answer from the options given below —
Show Answer

Q23) Which of the following is advantage of EVA? Show Answer

Q24) Which one of the following is false? Show Answer

Q25) Which of the following action can be taken to improve EVA? Show Answer

Q26) Which of the following matters are required to be covered in Management Discussion & Analysis Report?
I. Industry Structure & Developments
II. Opportunities and threats
III. Auditors negative remarks
IV. Product-wise performance
V. Risks and concerns
VI. Notes to financial statements
VII. SEBI Directions
Select the correct answer from the options given below —
Show Answer

Q27) Market value added is the difference between - Show Answer

Q28) In the audit report, auditor expresses his opinion whether the financial statement of the company gives _____ in conformity with the accounting principles. Show Answer

Q29) The auditor of a company is required to give his report in accordance with the provisions of _____ of the Companies Act, 2013. Show Answer

Q30) Which of the following is not a objective of financial reporting given by Financial Accounting Standard Board (FASB)? Show Answer

Q31) __________ can be defined as the value created by the activities of a firm, that is, sales less the cost of bought in goods and services. Show Answer

Q32) Value added can be defined as - Show Answer

Q33) Which of the following is advantage of Value Added Statement? Show Answer

Q34) Which of the following is deducted in Value Added Statement in 'Value Added’ section? Show Answer

Q35) Which of the following is appears in 'Value Applied' section in the value added statement? Show Answer

Q36) If we add 'Cost of Capital’ to 'Economic Value Added’ we gets - Show Answer

Q37) To which type of company the Companies (Auditor’s Report) Order, 2016 (CARO) applies? Show Answer

Q38) CARO, 2016 applies to a private limited company being a subsidiary or holding company of a public company, having a paid up capital and reserves and surplus not more than __________ as on the balance sheet date Show Answer

Q39) CARO, 2016 applies to a private limited company which has total revenue as disclosed in Scheduled III to the Companies Act, 2013 including revenue from discontinuing operations exceeding _____ during the financial year as per the financial statements. Show Answer

Q40) To which type of company the Companies (Auditor’s Report) Order, 2016 (CARO) applies?
1. A private limited company being a subsidiary or holding company of a public company, having a paid up capital and reserves and surplus more than Rs. 2 Crore as on the balance sheet date.
2. A private limited company which have total borrowings exceeding Rs. 2 Crore from any bank or financial in¬stitution at any point of time during the financial year.
3. A private limited company which have a total revenue as disclosed in Scheduled III to the Companies Act, 2013 (including revenue from discontinuing operations) less than Rs. 10 Crore during the financial year as per the financial statements.
Select the correct answer from the options given below -
Show Answer

Q41) CARO, 2016 shall not apply to the auditor’s report on - Show Answer

Q42) As per CARO, 2016 auditor's report must state whether the company has entered into any non-cash transactions with directors or persons connected with him as contained in _____ of Companies Act, 2013 Show Answer

Q43) The Board of every company referred to Section 135 (1), shall ensure that the company spends, in every financial year, at least _____ of the company made during the 3 immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. Show Answer

Q44) Financial statement and Board’s Report shall be sent to every member of the company, to every trustee for the debenture-holder of any debentures issued by the company, and to all persons other than such member or trustee, being the person so entitled, not less than _____ before the date of the meeting. Show Answer

Q45) A copy of the financial statements and Board's report duly adopted at the AGM shall be filed with the Registrar within _____ of the date of AGM. Show Answer

Q46) The Board of Directors of a company shall approve financial statement and the Board's report by means of resolutions passed - Show Answer

Q47) As per Rule 8 of the Companies (Accounts) Rules, 2014, the Report of the Board shall contain the particulars of contracts or arrangements with related parties Section 188 (1) in the - Show Answer

Q48) Every listed company and every other public company having a paid up share capital of _____ calculated at the end of the preceding financial year shall include, in the report by its Board of directors, a statement indicating the manner in which formal annual evaluationhas been made by the Board of its own performance and that of its committees and individual directors. Show Answer

Q49) Which of the following is not one of the underlying principles of the Corporate Governance? Show Answer

Q50) Directors’ responsibilities are unlikely to include: Show Answer

Q51) A director of a limited company may not be liable for wrongful trading if he - Show Answer

Q52) Which of the following actions will not help directors to protect themselves from non-compliance with their obligations and responsibilities? Show Answer

Q53) The corporate governance structure of a company reflects the individual company’s: Show Answer

Q54) CSR stands for _____ Show Answer

Q55) CSR and corporate governance represent a _____ between business and society. Show Answer

Q56) Who are the stakeholders of the business that are concerned with CSR? Show Answer

Q57) Corporate governance can be defined as: Show Answer

Q58) The company shall obtain a certificate from either the _____ regarding compliance of conditions of corporate governance of the listing agreement and annex the certificate with the director’s report, which is sent annually to all the shareholders of the company. Show Answer

Q59) Which type of director should be the head of the Stakeholders Grievance Committee? Show Answer

Q60) Which type of committee is not required to form for compliance with provisions of Corporate Governance under the Companies Act, 2013 and SEBI Regulations? Show Answer

Q61) R Ltd. has disbursed a dividend of Rs. 75 on each equity share of Rs. 25. The market price of share is Rs. 200. Corporate tax rate is 40%. Its cost of equity is - Show Answer

Q62) P Ltd. has 1,50,000 equity shares of Rs. 25 each and its current market value is Rs. 115 each. The before tax profit of the company for the year just ended is Rs. 36,36,363. Tax rate is 34%. Cost of equity of P Ltd. - Show Answer

Q63) NSZ Ltd. has equity of 15 Million and 10% debentures of 20 Million. Cost of equity is 18% and pre-tax cost of debt is 10%. Company estimates its EBI for 7 Million. Applicable tax rate is 30%. What is the Economic value added of NSZ Ltd. Show Answer

Q64) Maya Ltd. share beta factor (p) is 1.1214. Dividend paid by the company last year was Rs. 3.60 per share on face value of Rs. 20. The risk free rate of interest on government bonds is 7.5%. The expected rate of return on company equity shares is 13%. What is the cost of equity (Ke) of Maya Ltd.? Show Answer

Q65) H Ltd. fl is 1.8025. Dividend paid by the company last year was Rs. 9 per share on face value of Rs. 30. The risk free rate is 0.061275. Risk premium is 0.0825. Calculate cost of equity capital. Show Answer

Q66) Rao Ltd. earns profit aftertax Rs. 3,96,000. Corporate tax is 0.4. Its capital structure consist of equity shares Rs. 9,60,000; 15% Term loan Rs. 4,80,000. Cost of equity is 0.12. its economic value added is - Show Answer

Q67) An analyst has calculated economic value added of Rs. 43,750 for Z Ltd. WACC of the company is 11.5% and applicable tax rate is 30%. The company paid interest of Rs. 1,00,000 during the year. Total assets of the company are Rs. 17,50,000. What is profit after tax (PAT) of the company? Show Answer

Q68) Ramola Ltd. report its NOPAT Rs. 25,00,000. Its capital employed and economic value added is Rs. 60,00,000 & Rs. 19,00,000 respectively. What is overall cost of capital of Ramola Ltd.? Show Answer

Q69) Compute the EVA with the help of following information:
Equity Rs. 15,00,000
Debt (10%) Rs. 7,00,000
Profit after tax Rs. 4,00,000
Risk-free rate of return is 7%.
Beta (?) = 0.9
Market rate of return = 15%.
Applicable tax rate is 40%.
Show Answer

Q70) If after-tax operating income is Rs. 1,85,000, weighted average cost of capital is 11%, total assets are Rs. 4,85,000 and total liabilities are Rs. 3,67,000, then economic value added would be - Show Answer

Q71) Prosperous Bank has a criterion that it will give loans to companies that have an economic value added (EVA) greater than zero for the past three years on an average. Bank is considering lending money to a small company that has characteristics shown below:
(i) Average operating income after tax equals to Rs. 25,00,000 per year for the last 3 years.
(ii) Average total assets over the last 3 years equals Rs. 75,00,000.
(iii) Weighted average cost of capital appropriate for the company is 10%, applicable for all 3 years.
(iv) Company’s average current liabilities over past 3 years are Rs. 15,00,000.
Economic Value Added = ?
Show Answer

Q72) Which section of Companies Act, 2013 deals with auditors report: Show Answer

Q73) CARO does not apply on a private company if, during a financial year turnover not exceeding - Show Answer

Q74) CARO does not apply to Show Answer

Q75) CARO come into existence in the year — Show Answer

Q76) Section 134 of the Companies Act, 2013 deals with Show Answer

Q77) “Value added statement” is related with Show Answer

Q78) To calculate Economic Value Added (EVA) the cost of equity is deducted from - Show Answer

Q79) Market Value Added is the difference between - Show Answer

Q80) Shareholder Value Added? Represents Show Answer

Q81) When economic value added is used as the performance measure, value is only created if the after-tax operating income exceeds Show Answer

Q82) Which of the performance evaluation methods takes into consideration tax effects? Show Answer

Q83) Which of the following best describes “Market Value Added”? Show Answer

Q84) As per SA 700 “Forming an Opinion and Reporting on Financial Statements”, the description of the auditor’s responsibilities for the audit of the financial statements shall be included: Show Answer

Q85) A matter giving rise to a modified opinion in accordance with SA 705 (Revised), or a material uncertainty related to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern in accordance with SA 570 (Revised), are by their nature key audit matters. In relation to this statement, select the appropriate answer: Show Answer

Q86) The auditor shall express a qualified opinion when: Show Answer

Q87) When reporting in accordance with a compliance framework and the auditor expresses an adverse opinion, the auditor shall state that, in the auditor’s opinion because of the significance of the matter(s) described in the Basis for Adverse Opinion section - Show Answer

Q88) If there is a material misstatement of the financial statements that relates to specific amounts in the financial statements (including quantitative disclosures in the notes to the financial statements), the auditor shall include in the ............. a description and quantification of the financial effects of the misstatement, unless impracticable. Show Answer

Q89) Purpose of Guidance Note on Reports and Certificates for Special Purposes is to: Show Answer

Q90) Which of the following engagements is covered within the scope of Guidance Note on Reports and Certificates for Special Purposes Show Answer

Q91) As per Guidance Note on Reports and Certificates for Special Purposes in conducting an assurance engagement, the objectives of the practitioner is to obtain either reasonable assurance or limited assurance, as appropriate, about whether the subject matter information is free from material misstatement. The term limited assurance engagement implies: Show Answer

Q92) Scope of certificate issued by a practitioner is ............. Show Answer

Q93) In which of the following companies, auditor is required to report on matters specified under CARO, 2016 : Show Answer

Q94) A private limited company, in order to be covered under CARO, 2016, must satisfy which of the following conditions : Show Answer

Q95) Astha Pvt. Ltd., which is a subsidiary company of Kiran Pvt. Ltd., has fully paid capital of Rs. 40 lakh. During the year, the company had borrowed Rs. 55 lakh each from a bank and a financial institution independently. It has the turnover ofRs. 175 lakhs. Show Answer

Q96) CARO, 2016 is applicable over a private limited company, having paid up capital and reserves and surplus isRs. 1 crore or more as on the balance sheet date. For this purpose, Show Answer

Q97) Para 3(iii)(c) of CARO, 2016 requires the auditor to state the total amount overdue for more than 90 days, and whether reasonable steps have been taken by the company for recovery of the principal and interest. This reporting is required in which of the following situation : Show Answer

Q98) ABC Ltd., a listed company pays to its managerial personnel the remuneration in excess of the limits prescribed under the Companies Act, 2013 without obtaining the necessary approvals. While reporting under CARO, 2016, auditor is required to state : Show Answer

Q99) When reporting under CARO, 2016, auditor is required to state in case of Nidhi Companies, whether the Nidhi company has complied with: Show Answer

Q100) When reporting under CARO, 2016, auditor is required to state in case of Nidhi Companies, whether the Nidhi company has complied with Net Owned Funds to Deposits liability in the ratio of 1:20. For this purpose, the deposit liability consists of: Show Answer

Q101) Auditor’s report under CARO, 2016 in terms of Para 3(xvi) shall incorporate : Show Answer

Q102) If a company is not regular in deposit of statutory dues to the appropriate authorities, auditor need to report on arrears of outstanding dues as at the last day of the financial year concerned for a period of: Show Answer

Q103) While reporting under Clause (x) of Para 3 of CARO, 2016, with respect to fraud, auditor is required to report on Show Answer

Q104) While carrying out audit of ABC ltd, auditor observed that a term loan was obtained by the company from a bank forRs. 75 lakhs for acquiring R&D equipment, out of whichRs. 12 lakhs were used to buy a car for use of the concerned director, who was overlooking the R&D activities. Auditor is required to report the matter Show Answer

Q105) Reporting under CARO, 2016 will be required in case of which companies: Show Answer

Q106) Reporting under CARO, 2016 will be required in case of which companies: Show Answer

Q107) In which of the following companies, auditor is required to report on matters specified under CARO, 2016 Show Answer

Q108) While carrying out the audit of X (P) Ltd., auditor observed that total managerial remuneration paid by the company to its directors including managing director, whole time director and its manager exceeds 11 % of net profit. While reporting under CARO, 2016, auditor is : Show Answer

Q109) A simplified financial statement that shows how much wealth has been created by a company is called _____ Show Answer

Q110) Company Auditor's Report Order, 2020, was issued by the Show Answer

Q111) Company Auditor's Report Order (CARO), 2020 is not applicable to: Show Answer

Q112) As per Section 149 (1) of the Companies Act, 2013, the paid-up share capital requirement for non-listed company, having at least one woman director is: Show Answer

Q113) As per the concept of value added statement, "Gross value Added" is: Show Answer

Q114) The difference between the Company's total market value
and Capital invested is a: Show Answer

Q115) CARO 2020 is applicable to: Show Answer

Q116) Every non-listed public company must have at least one women director, if it has: Show Answer

Q117) The areas of corporate governance included in Companies Act, 2013 are: Show Answer

Q118) Market Value Added is: Show Answer

Q119) Shareholder Value Added (SVA) is: Show Answer

Q120) If we add 'Cost of Capital' to 'Economic Value Added' we get ______ Show Answer

Q121) CARO, 2020 applies to a private limited company being a subsidiary or holding company of a public company, having a paid up capital and reserves and surplus not more than _____ as on the balance sheet date. Show Answer

Q122) CARO, 2020 applies to a private limited company which has a total revenue as disclosed in Schedule III to the Companies Act, 2013 including revenue from discountinuing operations exceeding ______ during the financial year as per the financial statements. Show Answer

Q123) A copy of the financial statements and Board's report duly adopted at the AGM shall be filed with the Registrar within ______ of the date of AGM.
Show Answer

Q124) CSR and corporate governance represent a ______ between business and society. Show Answer

Q125) Which type of director should be the head of the Stakeholders Grievance Committee? Show Answer

Q126) Rishabh Ltd. earns a profit after tax Rs 3,96,000. Corporate tax is 0.4. Its capital structure consists of equity shares of Rs 9,60,000. 15% Term Loan Rs 4,80,000; Cost of equity is 0.12. Its economic value added Show Answer

Q127) CARO 2020 is applicable on small companies, if Show Answer

Q128) As per section 138 of the Companies Act 2013, Internal Audit is compulsory if in the preceding financial year turnover: Show Answer

Q129) Company Auditor's Report Order (CARO), 2020 was issued by_____ Show Answer

Q130) CARO, 2020 applies to a private limited company which has a total revenue disclosed in Schedule III to the Companies Act, 2013, including revenue from discontinuing operations exceeding _______ during the financial year as per the financial statements.
Show Answer

Q131) Every non-listed public company must have at least one woman director, if it has : Show Answer

Q132) Stakeholders Grievance Committee is headed by______ Show Answer

Q133) Excess of Company's total market value over Capital invested is._____. Show Answer

Q134) Govind is the holder of 200 shares of Rs 10 each. He had paid on these shares application money of Rs 2 each, allotment money of Rs 2 each and first call money of Rs 3 each. He has failed to pay the final call amount, hence all his holdings were forfeited. Out of them 100 shares were re-issued at Rs 11 each. The amount to be transferred to Capital Reserve Account would be: Show Answer

Q135) Which section of Companies Act, 2013 deals with auditors report: Show Answer

Q136) Which section of Companies Act, 2013 deals with women director? Show Answer

Q137) Which of the following is not a feature of corporate financial reporting? Show Answer

Q138) Financial reporting should provide information about the : Show Answer

Q139) CARO 2020 does not apply: Show Answer

Q140) CARO 2020 does not apply to: Show Answer

Q141) Corporate governance involve a set of relationship between a : Show Answer

Q142) Corporate governance deal with: Show Answer

Q143) Which of the following is not an objectives of corporate governance? Show Answer

Q144) Audit committee shall consist of: Show Answer

Q145) Audit committee constitutes if: Show Answer

Q146) Internal audit constitutes if: Show Answer

Q147) Which section of Companies Act, 2013 deals with Series Fraud
Investigation Office (SFIO)? Show Answer

Q148) Which Section of Companies Act, 2013 deals with Corporate Social Responsibility? Show Answer

Q149) CSR committee constituting Show Answer

Q150) Which of the following is not included under Corporate Governance Report? Show Answer

Q151) Value Added Statement (VAS) is a : Show Answer

Q152) The concept of value added initially used in: Show Answer

Q153) Calculate value added in accordance with the calculation of: Show Answer

Q154) Which of the following is not a limitation of value added statement? Show Answer

Q155) How to calculate EVA? Show Answer

Q156) EVA is a: Show Answer

Q157) Which one of the following is not an advantages of EVA analysis? Show Answer

Q158) Market value added is the difference between : Show Answer

Q159) How to calculate market value added (MVA)? Show Answer

Q160) Market value of equity: Show Answer

Q161) Shareholder value added (SVA) methodology is a: Show Answer

Q162) SVA applications includes: Show Answer

Q163) Shareholder value added (SVA) represents the :

Show Answer

Q164) FASB stands for:
Show Answer

Q165) Which one of the main feature of Corporate financial reporting?
Show Answer

Q166) Which of the following is not a feature of Corporate Financial Reporting? Show Answer

Q167) SVA stands for:
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Q168) CVA stands for:
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Q169) NFRA stands for:
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Q170) The auditor of XYZ Ltd. Company is required to give report in accordance with the provisions of section _________ of the Companies Act 2013.
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Q171) Audit Committee is mandatory for:
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Q172) Audit Committee shall consist minimum _______ directors were independent directors forming majority.
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Q173) Audit report is meant for the ______ of the company.
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Q174) Under section 143(12) of the Companies Act, 2013, State that any ________ of the company has to be reported to the Central Government. Show Answer

Q175) Violation of Section 143(12) of Companies Act, 2013, punishable with fine which shall not be less than lakh rupees but which may extend to ____ lakh rupees.
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Q176) An audit report is the final product of audit work by:
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Q177) Audit report with reservation is knows as:
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Q178) Disclaimer of opinion is made when auditor is:
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Q179) Negative report is made when auditor is: Show Answer

Q180) Section 134 of the Companies Act, 2013 deals with:
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Q181) The audit report shall be attached to every_____
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Q182) If company contravene the Provisions of Section 134 of the Companies Act, 2013, the company shall be punishable with fine which shall not be less than ____. Show Answer

Q183) The objective of Corporate Governance include:
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Q184) Which of the following is not an objectives of Corporate Governance:
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Q185) Section 149(1) of the Companies Act, 2013 deals with: Show Answer

Q186) The strength of number of independent director for the listed public company will be ________.
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Q187) The strength of number of independent director for the unlisted public companies having turnover of 100 crore rupees or more will be _______
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Q188) The strength of number of independent directors for the unlisted public companies having paid up capital of 10 crore of more will be _______
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Q189) Listed Companies to have ______ Show Answer

Q190) Non listed public companies having paid up share capital of 100 crore or more will be ____
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Q191) Non-listed public companies having turnover of 300 crore or more will be ____
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Q192) Internal audit is mandatory
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Q193) Internal audit is mandatory for:
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Q194) Internal audit is mandatory for:
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Q195) Inter audit is mandatory for:
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Q196) Section 138 of Companies Act, 2013 deals with:
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Q197) The Central Government shall establish an office called _____. Show Answer

Q198) Capital employed is:
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Q199) Economic value added is:
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Q200) Value added statement is a:
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Q201) Shareholder value added (SVA) represents the
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Q202) The value added statement is divided into ______. Show Answer

Q203) Share value added is:
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Q204) Market value added is: Show Answer

Q205) Market value of equity is:
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Q206) EVA is:
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Q207) Net operating profit after taxes (NOPAT) is:
Show Answer