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IAS commerce solved papers

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IAS commerce solved papers
COMMERCE AND ACCOUNTANCY – Sample Paper Solved Paper
IAS Commerce Union Public Service Commission Exam Solved Paper
previous years solved question paper of IAS Commerce

1. Which of the following should be obtained as a basis of conclusions by the auditor?

(a) Sufficient evidence and detailed evidence

(b) Appropriate evidence and oral evidence

(c) Detailed evidence and appropriate evidence

(d) Sufficient evidence and appropriate evidence

Ans. (d)

2. Which one of the following is the best way for an auditor to satisfy himself that the amount of cash-in-hand shown in the balance sheet is correct?

(a) To obtain a certificate from the cashier to this effect

(b) To visit the location where cash is kept at the close of business hours on the last working day of the financial year and count the cash-in-hand

(c) To visit the location where cash is kept at the close of business hours on the first working day of the financial year and count the cash-in-hand

(d) To compare the amount of cash-in-hand at the balance sheet date with the corresponding amount in the previous year’s balance sheet

Ans. (b)

3. Which one of the following is the correct statement?

The most important factor influencing evolution and growth of auditing is:

(a) Industrial Revolution a

(b) divorce of ownership from management

(c) establishment of the Institute of Chartered Accountants of India adoption of mechanized accounting

Ans. (b)

4. Match List-I (Audit Test) with List-II (Situation) and select the correct answer using the code given below the Lists:

List-I                                                                    List –II

(Audit Test)                                                          (Situation)

A. Depth testing                   1. Examination in depth by the auditor of one accounting

function or department at an interval planned by auditor

B. Vouching audit               2. Used in situations where evidence of a single error gives

hint to the auditor of a serious lapse which may require

investigation or extensive testing

C. Discovery sampling       3. Applied in situations where auditor has discovered that

internal control is virtually absent or unreliable and as a

result, it would be necessary to check all the documentary

evidences.

D. Rotational test                 4. Involves tracing through the entire system all the aspects

of a transaction which the auditor wishes to check

Codes:

A B C D

(a) 1 3 4 2

(b) 4 2 3 1

(c) 1 4 3 2

(d) 4 3 2 1

Ans. (d)

5. Which one of the following statements is correct?

An auditor of a limited company may be removed from his office before the expiry of his term:

(a) by passing a special resolution in general meeting

(b) by passing an ordinary resolution in general meeting after obtaining prior approval of the Central Government

(c) by passing unanimous resolution in the board meeting

(d) without passing a resolution in the. general meeting

Ans. (b)

6. Which one of the following statements regarding appointment of auditor is correct?

(a) A company where sixty percent shares are owned by private investors and forty percent shares are owned by the Central Government; private investors shall appoint the auditor

(b) A company where thirty percent shares are owned by the Centre and twenty-five percent by a State Government; auditor is appointed by the Comptroller and Auditor-General of India

(c) A company where thirty percent shares are owned by the State Government and forty-five percent shares are owned by private investors; auditor is appointed by the State Government

(d) A company where controlling shares are held neither by Central Government nor by State Government; auditor is appointed by the Comptroller and Auditor-General of India.

Ans. (b)

7. Match List-I (Basis of classification) with List-II (Types of Audit) and select the correct answer using the code given below the Lists:

List-I                                                   List-II

(Basis of classification)                          (Types of Audit)

A. Time                                                1. Complete Audit

B. Subject matter                                 2. Public Audit

C Extent or coverage                           3. Periodical Audit

D. Organization structure                    4. Government Audit

5. Cost Audit

Code:

A B C D

(a) 3 4 1 5

(b) 1 5 2 4

(c) 3 5 1 4

(d) 1 4 2 5

Ans. (c)

8. Match List-I (Explanation) with List-II (Types of Audit) and select the correct answer using the codes given below the lists:

List-I                                                                            List-II

(Explanation)                                                             (Types of Audit)

A. Audit work is carried on almost simultaneously        1. Balance Sheet Audit

with recording transaction

B. Auditor starts his work after the final accounts          2. Continuous Audit

have been prepared

C. Audit conducted in between two annual audits          3. Interim Audit

D. Some of the books and records of the who period      4. Partial audit

or specific period are audited

Code:

A B C D

(a) 2 4 3 1

(b) 3 1 2 4

(c) 2 1 3 4

(d) 3 4 2 1

Ans. (c)

9. What does the total audit risk in an auditing situation comprise?

(a) Inherent risk, process risk and control risk

(b) Planning risk, control risk and assessment risk

(c) Process risk, control risk and detection risk

(d) Inherent risk, control risk and detection risk

Ans. (a)

10. What is a constructive and comprehensive appraisal and examination of organizational structure, plans, and objectives of a concern termed as?

(a) Management audit

(b) System audit

(c) Cost audit

(d) Procedural audit

Ans. (a)

11. Match List-I (Method of Auditing) with List-II (Procedure) and select the correct answer using the code given below the lists:

List –I                                       List -II

(Method of Auditing)                       (Procedure)

A. Vouching                         1. To select and examine a representative sample from a

large number of similar items

B. Audit Programme            2. Testing and checking done by quality control department

of an organization

C. Internal Audit                  3. Audit conducted by regular employees of a business

concern

D. Test Checking                4. The inspection of documentary evidence supporting and

substantiating a transaction

5. A detailed plan of the auditing work to be performed

Code:

A B C D

(a) 3 1 2 5

(b) 4 5 3 1

(c) 3 5 2 1

(d) 4 1 3 5

Ans. (b)

12. Which one of the following statements is correct?

When an auditor fails to obtain sufficient information to warrant an expression of opinion, he makes a

(a) disclaimer of opinion

(b) piecemeal opinion

(c) adverse opinion

(d) qualified opinion

Ans. (a)

13. Which one of the following statements is correct?

The auditor in a cooperative society conducts the audit on behalf of the:

(a) Members of Cooperative Society

(b) Central Government

(c) Registrar of Cooperative Societies

(d) Managing Committee of Cooperative Society

Ans. (a)

14. Which one of the following is the correct statement?

An independent financial audit is conducted because:

(a) the top management may have indulged in fraud and the auditor would detect the same and report to the shareholders

(b) the audit may result in suggesting improvement in the internal control system

(c) the audit enhances credibility to financial statement

(d) the audit guarantees that no material

Ans. (c)

15. Which one of the following statements is correct?

A special resolution is required for appointment of an auditor of a limited company in which:

(a) ten percent of the subscribed share capital is held by an insurance company

(b) seventy-five percent of the subscribed share capital i held by individuals

(c) not less than twenty-five percent of the subscribed share capital is held by the Central Government or State Government or other specified public financial institutions.

(d) not less than twenty percent of the subscribed share capital is held by a nationalized bank

Ans. (c)

16. Match List-I (Method of Collecting Audit Evidence) with List-II (Example) and select the correct answer using the code given below the lists:

List-I                                                                          List-II

(Method of Collecting Audit Evidence)                   (Example)

A. Observation                   1. Auditor finds that although there is no increase

in salaries and wages, contribution to Provident Fund has

increased

B. Correlation with            2. On a thorough scrutiny of payroll auditor comes across 13

related information                entries instead of 12 entries, one extra entry being for the

succeeding month of next year

C. Enquiry                         3. Auditor, on a visit of company’s godowns, finds that there is

a huge pile of damaged and obsolete stock.

On investigation he is told that the same are not shown as

.                                              such in the inventory sheets

D. Scanning                      4. On a prolonged interaction with various persons connected

with cash transactions auditors find that there is system of

internal check in regard to cash transactions

Code:

A B C D

(a) 3 2 4 1

(b) 4 1 3 2

(c) 3 1 4 2

(d) 4 2 3 1

Ans. (c)

17. Consider the following statements:

The techniques of auditing include

1 physical examination of tangible assets

2. confirmation from third parties

3. interview with the article clerk

4. study of the type of the organization

Which of the statements given above are correct?

(a) 1 and 4 only

(b) 2, 3 and 4 only

(c) 1, 2 and 3 only

(d) 1 and 2 only

Ans. (d)

18. Match List-I (Specific Item) with List-II (Relevant Internal Control Query) and select the correct answer using the code given below the Lists:

List-I                                                        List-II

(Specific Item)                              (Relevant Internal Control Query)

A. Fixed assets                   1. Are bank reconciliation statements prepared from .

time to time?

B. Purchase                        2. Are invoices checked and verified in regard to

description of materials, terms of payments, etc.?

C. Sales                              3. Are all invoices duly approved for payment?

D. Disbursement               4. Who authorizes for the sale of scraps ?

5. Who prepares payroll?

Code:

A B C D

(a) 2 3 4 1

(b) 4 1 2 5

(c) 2 1 4 5

(d) 4 3 2 1

Ans. (b)

19. Which of the following are examined to verify the legal charges?

1. Examine the payment made to the lawyer by reference to the bill and money receipt from the the lawyer as well as any amount paid in advance

2. Examine the basis of allocation of expenditure under capital and revenue head

3. Inspect the register of law suits, if maintained by the company

4. Scan the result of the law suit

Select the correct answer using the code given below:

Code:

(a) 1 and 3 only

(b) l, 2 and 3 only

(c) 2 and 4 only

(d) l, 2, 3 and 4

Ans. (b)

20. Which one of the following statements is correct?

Sampling in auditing involves:

(a) application of auditing procedures to transactions of only a part of the period under audit selected by the auditor

(b) application of auditing procedures to a sample of transactions from an account or class of transactions and drawing inferences about the entire account balance or class of transactions on this basis

(c) application of auditing procedures to only some of the items of financial statements selected by the auditor

(d) application of auditing procedures to transactions of only a division or department of the organization selected by the auditor

Ans. (b)

21. Test checking is applied in which of the following audit functions?

1. Vouching

2. Cash verification

3. Physical stock verification

4. Internal control evaluation

Select the correct answer using the code given below:

Code:

(a) 1 and 2 only

(b) 2, 3 and 4 only

(c) l, 2 and 4only

(d) 1 and 3 only

Ans. (d)

22. Which one of the following can fill a casual vacancy caused due to the death or incapability of the existing auditor?

(a) Board of Directors

(b) Shareholders of the Company

(c) Company Law Hoard

(d) SEBI

Ans. (a)

23. Which one of the following is the correct statement?

Negative confirmation procedure in relation to debtors is applied where

(a) the number of debtors is small and each owes a large sum

(c) the number of debtors is small and each owes a small sum

(d) the number of debtors is large and each owes a large sum

Ans. (b)

24. Which one of the following is the correct statement? Book Debts should be verified with the help of:

(a) book debts from the balance sheet

(b) amount received from debtors

(c) debtors’ schedule

(d) certificate of book debts from the management

Ans. (c)

25, What is/are the purpose(s) of using working papers prepared by an auditor?

1. Planning and conduct of the audit efficiently

2. Supervision and review of audit work performed by the juniors

3. Producing the working papers as evidence of the audit work performed by him

Select the correct answer using the code given below

Code:

(a) 1, 2 and 3

(b) 2 only

(c) 2 and 3 only

(d) 1 and 3 only

Ans. (a)

26. What is the maximum number of companies for which a company auditor on being an individual can be an auditor at one time?

(a) 2

(b) 5

(c)10

(d) 20

Ans. (d)

27. What is an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization called?

(a) Internal Auditing

(b) Internal Check

(c) Internal Control

(d) Administrative Control

Ans. (a)

28. Which one of the following is the correct statement?

When an auditor finds significant unexplained fluctuation in various financial ratios while performing analytical review procedures, he should normally

(a) qualify the audit report

(b) issue a letter of weaknesses to the management

(c) extend his substantive procedures for detailed verification of transactions and balances

(d) make other quantitative checks

Ans. (c)

29. Consider the following in respect of the procedure adopted for buying and selling at stock exchange:

1. Making the contract

2. Contract note

3. Selection of broker

4, Placing order

5. Settlement

What is the correct sequence of the procedure for dealing at stock exchange?

(a) 1-3-2-5-4

(b) 3-1-5-2-4

(c) 1-4-2-3-5

(d)  3-4-1-2-5

Ans. (d)

30. What is the trading activity that seeks a profit from price variations of securities in the different markets

termed as?

(a) Margin trading

(b) Market rigging

(c)Option dealings

(d) Arbitrage

Ans. (d)

The following item consist of two statements, One labeled the ‘Assertion A’ and the other labeled the Reason R. You are to examine these two statements carefully and decide whether the Assertion A and the Reason R are individually true and if so, whether the reason is a correct explanation of the Assertion. Select your answers to these items using the codes given below and mark your answer sheet accordingly:
Codes:
(a) Both A and Rare true and R is the correct explanation of A.
(b) Roth A and R are true but R is NOT a correct explanation of A
(c) A is true but R is false
(d) A is false but R is true

31. Assertion (A) Only listed securities are dealt with in the stock exchanges.

Reason (R) Listing at stock exchanges indicates that a company is a blue chip.

Ans. (c)

32. Which one of the following statements in the context of the famous case of Solomon Vs. Solomon& Co. Ltd. (1897), AC 22, is correct?

(a) A company is entirely distinct from and independent of its members even if a member owns virtually the whole of its shares

(b) A company is distinct from and independent of its members; but in case a member owns virtually the whole of its shares, they are actually the same

(c) A company and its members are not distinct and independent from each other

(d) A person having issued at least 51% of company’s share would only be treated distinctly

Ans. (a)

33. Consider the following statements:

1. Shares payable in cash must have been allotted up to the amount of the minimum subscription

2. Directors must have paid in cash the application and allotment money in respect of the shares contracted to be taken by them for cash

3. No money is liable to be repaid to the applicants by reason of failure to apply for or to obtain permission for shares or debentures to be dealt on in any recognized stock exchange

As per Section 149(1) of the Companies Act, 1956, the above conditions are imposed on companies for which one of the following?

(a) For listing of shares at the stock exchange

(b) To obtain Certificate of Commencement of Business

(c) To obtain Certificate of Incorporation

(d) To hold Statutory Meeting of the company

Ans. (b)

34. The public documents of a company should not only be read but to be understood as they are and therefore deemed to have been read by those who deal with the company. What is this rule known as?

(a) The rule of equality

(b) The rule of constructive notice

(c) The rule of liability

(d) The rule of abrogation

Ans.(b)

35. Which doctrine emanated from the famous case of Royal British Bank Vs. Turquand (1856) 119 ER 886?

(a) Doctrine of ultra vires

(b) Doctrine of subjugation

(c) Doctrine of indoor management

(d) Doctrine of proportional representation

Ans. (c)

36. What is the penalty for making any statement, promise or forecast which.is false, deceptive or misleading, or by any other dishonest concealment of material fact to enter into any agreement for acquiring shares or debentures through the prospectus?

(a) With imprisonment extending to five years or with a fine of rupees one lakh or with both

(b) With imprisonment extending to three years or with a fine of rupees one lakh or with both

(c) With imprisonment extending to five years only

(d) With a fine of rupees one lakh only

Ans. (a)

37. Consider the following statements

The Life Insurance Contracts are contracts of utmost

good faith because:

1 only insured knows about his health

2. only insured knows about his family history

3. insured cannot attempt to make profit out of his health condition

4. insurer’s risk is related to the disclosures made by insured

Which of the statement(s) given above is/are correct?

(a) l only

(b) 1, 2, 3 and 4

(c) 4 only

(d) 2, 3, and 4 only

Ans. (b)

.

38. In a contract of insurance, under which of the following principles the insurer, after having paid the loss to the insured, acquires all rights and remedies as the insured would have enjoyed regarding the said loss?

(a) Principle of Subrogation

(b) Principle of Contribution

(c) Principle of Causa Proxima

(d) Principle of Insurable Interest

Ans. (a)

39. Consider the following statement.

The Bill of Lading issued by the Master of ship serves as a/an:

1. receipt for the goods shipped

2. open general license

3. evidence of the contract

4. dock challan

Which of the statements given above are correct?

(a) 1 and 3 only

(b) 1 and 2 only

(c) 2 and 4 only

(d) 3 and 4 only

Ans. (a)

40. Match List-I (Staff Authority) with List-II (Function) and select the correct answer using the code given below the lists:

List-I                                                List-II

(Staff Authority)                                  (Function)

A. Service Staff Authority          1. Provides specialized counseling to line managers

B. Control Staff Authority           2. Provides service authority relationship to the line

manager

C. Advisory Staff Authority        3. Specific authority for certain functions

D. Functional Staff Authority     4. Not only advises but restrains line authority

Code

A B C D

(a) 1 3 2 4

(b) 2 4 1 3

(c) 1 4 2 3

(d) 2 3 1 4

Ans. (b)

41. Which one of the following statements about MBO (Management by Objectives) is not correct?

(a) The greater the participation of the manager and his employees in setting goals, the more likely that the goals would be achieved

(b) Autonomy in implementation of the plans is a pre-requisite for the success of MBO

(c) Individual goal ‘setting is not necessary for the success of MBO

(d) Top level goal setting is a pre-requisite for the success of MBO

Ans. (d)

42. What is the job evaluation method in which a number of compensable factors are identified and then the degree to which each of these factors is present on the job is determined, called?

(a) Job classification

(b) Point rating

(c) Factor comparison

(d) Job ranking

Ans. (c)

43. Which one of the following help in determining long-term objectives of an organization, adoption of course of action and allocation of resources necessary to achieve the set goals?

(a) Rules

(b) Policies

(c) Procedures

(d) Strategies

Ans. (d)

44. Match List-I (Style of Leader) with List-II (Approach) and select the correct answer using the codes given below the lists:

List-I                                                             List -II

(Style of Leader)                                               (Approach)

A. Impoverished Management           1. Highest concern for production and people

B. Country Club Management           2. Highest concern for production but low concern

for people

C. Autocratic Task Managers            3. Very low concern for production but concern for

people

D. Team Managers                             4. Very low concern for production and people

Code:

A B C D

(a) 4 3 2 1

(b) 2 1 4 3

(c) 4 1 2 3

(d) 2 3 4 1

Ans. (a)

45. Consider the following statements:

1. According to Trait theory of leadership, leaders are born, not made.

2. There is high concern for production but low concern for people. It is called as Middle of the road management.

3. There is a high concern for both production as well as people. It is called as Impoverished management.

Which of the statement(s) given above is/are correct?

(a) 1 only

(b) 1 and 2 only

(c) 2 and 3 only

(d) l and 3 only

Ans. (a)

46. Match List-I (Basic Components of Expectancy Theory) with List-II (Definition) and select the correct answer using the code given below the lists:

List-I                                                        List -II

(Basic Components                                                   (Definition)

of Expectancy Theory)

A. Expectancy                     1. Force directing specific behavioral alternatives

B. Instrumentality                2. Preference of an individual for a particular outcome

C. Motivation                       3. Probability that effort will lead to good performance

D. Valence                           4. Probability that successful performance will lead to

certain outcomes

Codes:

A B C D

(a) 1 4 2 3

(b) 2 3 1 4

(c) 1 3 2 4

(d) 2 4 1 3

Ans. (b)

47. Match List-I (Description) with List-II (Functional Feature) and select the correct answer using the code given below the lists:

List –I                                                             List –II

(Description)                                            (Functional Feature)

A. Decentralization in organization        1. Machine-oriented and not in man-oriented

B. Chain of communication                    2. Line of authority

C. Task of top management                    3. Setting goals of organization

D. Movement of task management         4. Empowerment of subordinates

Codes:

A B C D

(a) 3 1 4 2

(b) 4 2 3 1

(c) 3 2 4 1

(d) 4 1 3 2

Ans. (b)

48. Which one of the following approaches to the organization gives managers a way of looking at the organization as a whole and as a part of the larger external environment?

(a) Behavioral science

(b) Contingency

(c) Human relations

(d) Systems

Ans. (d)

49. Which one of the following types of leadership is based on organizational status?

(a) Informal leadership

(b) Diplomatic leadership

(c) Charismatic leadership

(d) Bureaucratic leadership

Ans. (d)

50. Consider the following steps with regard to job ranking method:

1. Obtain job information

2. Rank jobs

3. Select jobs

4. Select compensable factors

5. combine ratings

What is the correct sequence of the steps given above?

(a) 1 -3-2-5-4

(b) 2-1-3-5-4

(c) 2-3-1-4-5

(d) 1-3-4-2-5

Ans. (d)

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