300+ TOP Auditing and Corporate Governance MCQs & Answers

Auditing and Corporate Governance Multiple Choice Questions

1. Auditing refers to
A. Examination of accounts of business units only

B. Preparation and checking of accounts

C. Examination of accounts by professional accountants

D. Checking of vouchers

Answer: A.Examination of accounts of business units only

2. Main object of auditing is
A. Detection of errors

B. To find out whether P&L a/c and B/S show true and fair state of affairs

C. Detection of frauds

D. Non of the above

Answer: B.To find out whether P&L a/c and B/S show true and fair state of affairs

3. Auditing is luxury for a
A. Joint stock company

B. Partnership firm

C. Small shop-keeper

D. Government company

Answer: C.Small shop-keeper

4. Limitation of audit is
A. That it does not reveal complete picture

B. That it does not guarantee accuracy of accounts

C. That auditor may be biased

D. All of the above

Answer: D.All of the above

5. Internal Audit is undertaken
A. By independent auditor

B. Statutorily appointed auditor

C. By a person appointed by the management

D. By a Government auditor

Answer: C.By a person appointed by the management

6. Final audit implies
A. Audit of accounts at the end of the year

B. Finally checking of accounts to reveal frauds

C. audit for submitting report immediately at the end of year

D. audit of banking companies

Answer: A.Audit of accounts at the end of the year

7. Institute of Chartered Accountants of India was established on
A. 1 st April,1956

B. 1 stApril, 1949

C. 1 st July,1956

D. 1 st July,1949

Answer: D.1 st July,1949

8. Joint audit implies
A. Audit of two concerns together

B. Audit of joint stock companies

C. Audit of joint sector companies

D. Audit of two firms of C.A.

Answer: D.Audit of two firms of C.A.

9. The term auditing was associated with
A. Hearing of accounts

B. Hearing of system

C. Hearing of report

D. None of the above

Answer: A.Hearing of accounts

10. The scope of auditing is
A. Narrow

B. Wide

C. Long

D. Short

Answer: B.Wide

11. The arrangement of duties of staff in such a manner, that the work of one person is automatically checked by another during the course of carrying out, recording and processing a transaction.
A. Internal check

B. Internal audit

C. Vouching

D. Internal control

Answer: A.Internal check

12. The object of internal audit is
A. To detect frauds and errors

B. To prevent frauds and errors

C. Both (a) and (b)

D. Neither (a) nor (b)

Answer: A.To detect frauds and errors

13. The process of inspecting a document that supports a recorded transaction in order to verify the authority and authenticity of such a transaction
A. Auditing

B. Audit planning

C. Vouching

D. Internal check

Answer: C.Vouching

14. Which of the following is not the procedure for vouching of cash sales:
A. Examine cash book

B. Examine cash memos

C. Examine the counterfoil of pay in slops

D. Examine balance sheet

Answer: D.Examine balance sheet

15. Who is responsible for the verification of assets?
A. Auditor

B. Management

C. Director

D. None of the above

Answer: A.Auditor

16. Which of the following object is not included while verifying the liabilities by the auditor?
A. Existence

B. Obligation

C. Completeness

D. All of the above

Answer: D.All of the above

17. The work of one clerk is automatically check by another clerk is called
A. Internal control.

B. Internal check.

C. Internal audit.

D. None of the above.

Answer: B.Internal check.

18. Which of the following is not a kind of audit?
A. Statutory and private audit.

B. Government and continuous audit.

C. Continuous, final, Interim, Cash, Cost and Management audit.

D. None of these.

Answer: D.None of these.

19. The audit that is made compulsory under statute is called _________.
A. Statutory audit.

B. Partial audit.

C. Complete audit.

D. Continuous audit.

Answer: A.Statutory audit.

20. This kind of audit is conducted generally between two annual audit ______.
A. Internal audit.

B. Interim audit.

C. Final audit.

D. Continuous audit.

Answer: B.Interim audit.

21. Voucher relates to _________.
A. Cash receipt.

B. Cash payment.

C. Credit transactions.

D. All the above.

Answer: D.All the above.

22. To verify cash transactions, it is necessary
A. System of internal control

B. Check all transaction

C. Documentary evidence for every transaction

D. All of the above.

Answer: D.All of the above.

23. In case of sales return, the auditor should check.
A. Credit notes and delivery challans.

B. Whether cash has been repaid to the client

C. Purchase invoices and goods received notes.

D. Credit notes and goods received notes.

Answer: D.Credit notes and goods received notes.

24. Which of the following is an importance of vouching?
A. Ensures all items are disclosed in the financial statement as per Schedule VI provisions

B. It helps to verify whether entries are passed as per acceptable accounting principles.

C. Helps in detection and prevention of errors & frauds

D. All the above

Answer: D.All the above

25. The elements of auditing includes –
A. Systematic and independent examination

B. Stated purpose

C. Collects and evaluates the evidence

D. All of the above

Answer: D.All of the above

26. Interim Audit refers to an audit conducted
A. In between two different accounting years

B. In between two annual audits

C. In between one statutory audit, one management audit and one internal audit

D. None of the above

Answer: B.In between two annual audits

27. Errors occurring when generally accepted accounting principles are not observed while recording any transaction in the books of accounts
A. Clerical errors

B. Compensating errors

C. Errors of principle

D. Errors of duplication

Answer: C.Errors of principle

28. Before the work of audit is commenced, the auditor prepares a written procedure needed to implement the audit work
A. Audit plan

B. Audit note

C. Audit programme

D. Audit risk

Answer: C.Audit programme

29. The work of one clerk automatically checked by another clerk is called
A. Internal control

B. Internal check

C. Internal audit

D. None of the above

Answer: B.Internal check

30. Section 138 of the Companies Act, 2013 made internal audit compulsory for
A. Every listed company

B. Every unlisted public company having paid-up share capital of 50 crores or more during the preceding financial year

C. Both (a) & (b)

D. Neither (a) nor (b)

Answer: C.Both (a) & (b)

31. “The process of inspecting documents that supports a recorded transaction in order to verify the authority and authenticity of such a transaction” is
A. Vouching

B. Verification

C. Internal Check

D. Internal Control

Answer: A.Vouching

32. The process of substantiation of assets and liabilities recorded in the books of accounts by physical inspection and examination of legal and official documents to form and expert opinion
A. Vouching

B. Voucher

C. Verification

D. Audit notebook

Answer: C.Verification

33. The term „Audit‟ is derived from the Latin word “Audire” which means
A. To listen

B. To hear

C. To know

D. To audit.

Answer: B.To hear

34. A systematic and independent examination of data ,statements,records,operations,and performance(financial or otherwise) for a stated purpose. In any auditing situation,the auditor perceives and recognizes the propositions before him for examination,collects evidence,evaluates the same and on the basis formulates his judgement which is,communicated through his audit report.” This definition is given by
A. Joseph Lancaster

B. Taylor and Perry

C. ICAI

D. ICAE.

Answer: C.ICAI

35. An error occurs due to negligence in recording the details of transaction, such errors are of clerical nature and are of wrong entries,wrong positioning,additions,transfer,etc.. is called
A. Errors of Commission

B. Errors of Omission

C. Errors of principle

D. Compensating Errors.

Answer: A.Errors of Commission

36. The primary objective of auditing is to
A. To examine the reliability and validity of financial statements.

B. To detect errors

C. To detect frauds

D. None of the above.

Answer: A.To examine the reliability and validity of financial statements.

37. Audits should be based on the six principles,according to
A. ISO 19001:2011

B. ISO 19011:2011

C. ISO 19111:2011

D. ISO 19000:2011

Answer: A.ISO 19001:2011

38. Under technique of Auditing,Documents which have their origin in the hands of the third party and held by them is
A. Reliable

B. More reliable

C. Reliable only if the internal control is effective.

D. Most reliable evidence.

Answer: D.Most reliable evidence.

39. Audit of partnership firm is under
A. Audit of other organizations covered by any law

B. Audit required under law

C. Audit of other organizations not covered by any law

D. None of the above.

Answer: C.Audit of other organizations not covered by any law

40. The external auditor are usually appointed by
A. The owners only

B. The government

C. The management and the government

D. The owners and in some cases by the government.

Answer: D.The owners and in some cases by the government.

41. The first auditor of company will hold office
A. For a period of one year

B. Till holding of statutory meeting

C. Till the conclusion of first annual general meeting

D. Till a new audtor is appointed

Answer: C.Till the conclusion of first annual general meeting

42. Remuneration of a company auditor is fixed by the
A. Shareholders

B. Board of Directors

C. Central Government

D. Appointing authority

Answer: D.Appointing authority

43. A company auditor in general has to submit his report to
A. Shareholders

B. Central Government

C. C&A-G

D. Board of Directors

Answer: A.Shareholders

44. Auditor should be dutiful like
A. A watch dog

B. a blood hound

C. A detective

D. An insurer

Answer: A.A watch dog

45. Internal auditor has to submit report to
A. Shareholders

B. Government

C. Company Law Board

D. None of the above

Answer: D.None of the above

46. An auditor is liable held criminally liable for
A. Loss to his client

B. Neglect of his duty

C. Offences against statutory provision

D. None of the above

Answer: C.Offences against statutory provision

47. A vacancy caused by resignation of the auditor is filled only
A. By Board of Directors

B. At the general meeting of shareholders

C. By the Central Government

D. By the Company Law Board

Answer: B.At the general meeting of shareholders

48. Civil liability of an auditor implies liability for
A. Misappropriation of cash

B. Misappropriation of goods

C. Fraud

D. Misfeasance

Answer: D.Misfeasance

49. ___________of the Companies act 2013 lays down provisions regarding the eligibility of appointment of an auditor.
A. Sec 141

B. Sec 142

C. Sec 143

D. Sec 144

Answer: A.Sec 141

50. Which of the following is not types of auditor
A. First auditor

B. Subsequent auditor

C. Casual vacancy

D. Last auditor

Answer: D.Last auditor

51. In case of first auditor appointed by the board of directors, who would fix remuneration
A. Board of directors

B. Shareholders

C. Debenture holders

D. Creditors

Answer: A.Board of directors

52. The tenure of first auditor shall be from the date of appointment till
A. The conclusion of first annual general meeting

B. The beginning of first annual general meeting

C. The conclusion of the second annual general meeting

D. The conclusion of special meeting

Answer: A.The conclusion of first annual general meeting

53. Forming an opinion on the financial statements the auditor‟s report shall be in
A. Writing

B. Verbal

C. Instruction to assistant

D. None of the above

Answer: A.Writing
54. Which of the following is an element of the Audit Report
A. Title& addressee

B. Introductory, scope and opinion paragraph

C. Date, place and auditors signature

D. All of the above

Answer: D.All of the above
55. The auditor who authorized the issue of misstatements in prospectus can beimprisoned for a term which may extend to
A. 5 years

B. 7 years

C. 8 years

D. 10 years

Answer: D.10 years
56. Which of the following is not the types of audit report based on the kind of opinion
A. Unmodified opinion report

B. Audit report with an emphasis of matter paragraph

C. Modified report

D. None

Answer: D.None
57. In case the Board of Directors fails to appoint first auditors, the shareholders shall appoint them at _______ by passing a resolution.
A. Extraordinary general meeting.

B. First annual general meeting.

C. Statutory meeting.

D. Annual general meeting

Answer: A.Extraordinary general meeting.
58. Which of the following statement is not correct regarding removal of first auditorbefore expiry of the term?
A. He is removed at a general meeting.

B. The approval of the central government is required for such removal.

C. The provision for removal are contained in sec 140(1) of Companies Act, 2013

D. The shareholders are authorized to do so

Answer: B.The approval of the central government is required for such removal.
59. The board of directors shall appoint first auditor of a company ___________.
A. Within one month of completion of capital subscription state of the company

B. Within one month of the promotion of the company.

C. Within one month of the commencement of the business of the company.

D. Within one month of incorporation of the company.

Answer: D.Within one month of incorporation of the company.
60. The first auditor of a government company shall be appointed within 60 days from thedate of registration of the company by.
A. The government company itself.

B. The Comptroller and Auditor General of India

C. The central government.

D. The shareholders.

Answer: B.The Comptroller and Auditor General of India
61. The liabilities of an auditor can be _________.
A. Civil

B. Criminal

C. Civil and Criminal.

D. Official

Answer: C.Civil and Criminal.
62. Which of the following statement is not correct regarding basic features/ elements/ form of an Audit Report
A. Title, Addressee and opening paragraph

B. Management‟s responsibility and auditor‟s responsibility

C. Opinion paragraph, date, address, signature of the auditor

D. None of these

Answer: D.None of these
63. is issued when the auditor is completely satisfied that there is nothing objectionable
A. Standard Unqualified Report or Clean Report

B. Qualified opinion

C. Disclaimer of opinion

D. Adverse opinion

Answer: A.Standard Unqualified Report or Clean Report
64. A casual vacancy in the office of an auditor shall be filled by.
A. Board of Directors.

B. Managing Director.

C. General meeting.

D. Central Government.

Answer: A.Board of Directors.
65. Who among the following cannot be appointed as auditor of a company?
A. A person who is a Chartered Accountant within the meaning of CA Act, 1949 and holds a certificate of practice.

B. Officer or employee of the company

C. A Chartered Accountant who is an auditor of more than 20 companies

D. Both (b) & (c)

Answer: D.Both (b) & (c)
66. First auditor of a company shall be appointed by the Board of Directors within
A. 30 days

B. 40 days

C. 45 days

D. 60 days

Answer: A.30 days
67. Removal of auditor that requires special resolution and previous approval of the Central Government
A. Resignation of Auditor

B. Retirement of Auditor

C. Removal of Auditor before expiry of term

D. Removal of Auditor after expiry of term

Answer: C.Removal of Auditor before expiry of term
68. The section which contains provisions regarding remuneration of the auditor is
A. Section 140(1)

B. Section 142

C. Section 139

D. Section 141

Answer: B.Section 142
69. The principal rights conferred upon the auditor by the Companies Act, 2013
A. Right to sign audit reports

B. Right to get his representation circulated

C. Right to speak as a member of the company

D. Right to make a written representation

Answer: A.Right to sign audit reports
70. The matters on which an auditor has a duty to report under Section 143 (3)can broadlydivided into two categories, namely
A. Statement of fact and opinion

B. Accounts examined and every financial statement during his tenure

C. Both (a) & (b)

D. Only (b)

Answer: A.Statement of fact and opinion
71. Report issued when the auditor on the basis of sufficient appropriate audit evidence, concludes that misstatements are both material and pervasive to the financial statement
A. Unqualified report

B. Disclaimer of opinion report

C. Qualified report

D. Adverse report

Answer: D.Adverse report
72. The sections of the Act under which an auditor ac be held criminally liable are
A. Section 34

B. Section 147

C. Section 448

D. All of the above

Answer: D.All of the above
73. An arrangement of accounting routine that errors and frauds are automatically prevented or discovered by the very operation of bookkeeping itself is called
A. Internal control

B. Internal check

C. Interim audit

D. Partial audit.

Answer: B.Internal check
74. The examination of documentary evidence in support of transactions contained in the books of accounts is referred to as
A. Voucher

B. Verification

C. Internal verification

D. Vouching

Answer: D.Vouching
75. Section ————–of the companies Act,2013 detailed the qualification of companyAuditors.
A. 141

B. 141(ab)

C. 140

D. 140(ab)

Answer: A.141

76. The first auditor of a company, other than a Government company, shall be appointedby
A. Shareholders

B. CEO

C. AGM

D. Board of Directors.

Answer: D.Board of Directors.
77. Select which one is not under the right of an Auditor
A. Right to obtain information and explanation

B. Right to visit branch office

C. Right to sign the audit report

D. Right to select the next auditor

Answer: D.Right to select the next auditor

78. The civil liability of an auditor can be for
A. Negligence

B. Misfeasance

C. Negligence and misfeasance

D. None of the above.

Answer: C.Negligence and misfeasance
79. Section —- of the companies Act governs the audit of branch offices.
A. 228(1)

B. 228(2)

C. (a) and (b)

D. 228

Answer: D.228
80. Sub-section (1A) of section 227 of the Companies Act specifies —–matters, whichare required to be looked into by a company auditor.
A. 6

B. 7

C. 2

D. 4

Answer: A.6
81. A Cost Auditor is appointed by the
A. Board of Directors

B. Shareholders

C. Central Government

D. C&A-G

Answer: A.Board of Directors
82. Management Audit means
A. Audit undertaken on behalf of the management

B. Evaluating performance of various management processes & functions

C. Compulsory audit of company management

D. All of the above

Answer: B.Evaluating performance of various management processes & functions
83. Report of Cost audit should be submitted to
A. Shareholders

B. Company Law Board

C. Central Government

D. All of the above

Answer: C.Central Government
84. A Tax Auditor of a firm/proprietary concern is appointed by
A. A Partner

B. The Proprietor

C. A person authorized by the assessee

D. All of the above

Answer: D.All of the above
85. The Cost auditor is concerned mainly with accounts related to
A. Cost

B. Finance

C. Both cost & finance

D. None of the above

Answer: A.Cost
86. The Management Auditor has to submit the audit report to
A. Shareholders

B. Company Law Board

C. Management

D. State Government

Answer: C.Management
87. Compulsory Tax Audit U/S 44AB is applicable for
A. 8 categories of Assessees

B. 6 categories of Assessees

C. 2 categories of Assessees

D. 4 categories of Assessees

Answer: D.4 categories of Assessees
88. The Cost auditor has to serve the interest of
A. Shareholders

B. Management

C. State Government

D. None of the above

Answer: B.Management
89. The verification of the correctness of cost accounts and of adherence to the cost accounting plan is known as
A. Cost Audit

B. Tax Audit

C. Management Audit

D. Internal Audit

Answer: A.Cost Audit
90. A comprehensive and critical review of all aspects of management process
A. Cost Audit

B. Tax Audit

C. Management Audit

D. Internal Audit

Answer: C.Management Audit
91. The management auditor may be appointed by
A. Shareholders

B. Board of directors

C. Shareholders or board of directors

D. None of the above

Answer: C.Shareholders or board of directors
92. The audit fees and expenses incidental to audit shall be determined by
A. The Chief Commissioner

B. The State Government

C. The Central Government

D. None

Answer: A.The Chief Commissioner
93. Which of the following is not audit software?
A. Generalized Audit Software

B. Specialized Audit Software

C. Utility Software

D. Micro Software

Answer: D.Micro Software
94. The full form of CAAT
A. Computer Assisted Audit Techniques

B. Computer Assistance Alternate Techniques

C. Computer Audit Assistance Technique

D. Customer Assisted Audit Technique

Answer: A.Computer Assisted Audit Techniques
95. Black box Approach is an approach which is also known as
A. Auditing around the computer

B. Auditing through the computer

C. Auditing above the computer

D. Auditing under the computer

Answer: A.Auditing around the computer
96. The process of collecting and evaluating evidence to determine whether a computer system safeguards assets, maintains data integrity, achieves organizational goals effectively, and consumes resources efficiently.
A. Electronic data processing

B. Electronic Domain Process

C. Environment Development process

D. None of the above

Answer: A.Electronic data processing
97. Tax audit comprises of
A. Compulsory Tax Audit

B. Tax Audit for claiming deductions and exemptions

C. Selective Tax Audit

D. All of the above

Answer: D.All of the above
98. Who among the following can be appointed as cost auditor of a company?
A. Chartered Accountant

B. Cost Accountant within the meaning of Cost and Works Accountants Act, 1959

C. An officer or employee of the company

D. Auditor of the company

Answer: B.Cost Accountant within the meaning of Cost and Works Accountants Act, 1959
99. Who among the following can conduct tax audit?
A. Practicing Chartered Accountant

B. A Chartered Accountant who has written the books of assessee

C. Employee of the assessee

D. Internal auditor

Answer: A.Practicing Chartered Accountant
100. Cost audit is a verification of cost records to estimate the ________ efficiency of a business.
A. External

B. Internal

C. Both internal and external

D. None of the above

Answer: B.Internal

101. Which of the following statements are true about management audit?
A. The management audit is made compulsory and statutory

B. Management audit cannot be conducted by an independent person

C. No time limit can be fixed for submission of the report under management audit

D. Management audit is a programme of one year

Answer: C.No time limit can be fixed for submission of the report under management audit
102. Which of the following is (are) true of the EDP auditors?
A. They should have computer expertise

B. They will be replaced by traditional auditors in the near future

C. Currently, there is a very high demand from firms that use personal computers

D. None of the above

Answer: A.They should have computer expertise
103. Audit software includes
A. Generalized Audit Software

B. Specialized Audit Software

C. Utility Software

D. All of the Above

Answer: D.All of the Above
104. International auditing standards are issued by the:
A. International Accounting Standards Board

B. Financial Accounting Standards Board

C. International Audit and Assurance Standards Board

D. Auditing Practices Board

Answer: C.International Audit and Assurance Standards Board
105. Under the Companies Act, 2013 a cost auditor must be a cost accountant having certificate of practice issued by the institute of Cost Accountants of India as per
A. Section 148

B. Section 147

C. Section 150

D. Section 151

Answer: A.Section 148
106. Management Audit assess the efficiency of management for third parties to commit funds for the business in situation such as –
A. Granting loans or participation in equity

B. Reviving sick units

C. Foreign collaborations

D. All of the above

Answer: D.All of the above
107. The section which contains provisions regarding compulsory Tax Audit is
A. Section 44AD

B. Section 44BB

C. Section 44AB

D. Section 44AE

Answer: C.Section 44AB
108. For an assesse carrying on business in India, deductions allowed under Section 33AB includes businesses of
A. Growing and manufacturing of tea

B. Growing and manufacturing of coffee

C. Growing and manufacturing of rubber

D. All of the above

Answer: D.All of the above
109. Transactions entered in the computer as they occur and processed simultaneously in the processing capabilities of accounting system is
A. Batch processing system

B. Real-time processing system

C. Distributed Data processing

D. None of the above

Answer: B.Real-time processing system
110. Selecting and printing audit samples, comparing data on separate files, comparing audit data with clients records
A. Functions of Generalized Audit Software

B. Integrated Test Data Approach

C. Test Data Approach

D. All of the above

Answer: A.Functions of Generalized Audit Software
111. Compliance with standard of Auditing is the responsibility of
A. Management

B. Those charged with governance

C. Auditor

D. Audit committee

Answer: C.Auditor
112. If the auditor is unable to draw reasonable assurance, he should either withdraw from engagement if permitted by law or disclaim his opinion, is given in which Standard on Auditing.
A. SA500

B. SA200

C. SA705

D. SA700

Answer: B.SA200
113. The ——- can be removed after the expiry of his term of office,as per the procedures laid down in section 225.
A. BOD

B. Clerk

C. Auditor

D. Shareholders.

Answer: C.Auditor
114. An appointed auditor may be removed from his office either in accordance with the provisions and as per restrictions imposed by the
A. Companies Act

B. Chartered Accountants Act

C. Both (a) and (b)

D. None of the above.

Answer: C.Both (a) and (b)
115. Cost audit is the verification of the correctness of cost accounts and adherence to the cost accounting plan. This concept is given by
A. Institute Of Chartered Accountant Of India

B. Institute Of Chartered Accountant Of London

C. Institute Of Cost and Works Accountants of India

D. Institute Of Cost and Works Accountants of London.

Answer: D.Institute Of Cost and Works Accountants of London.
116. Cost audit helps in settlement of trade disputes. This is the advantage for
A. Government

B. Management

C. Society

D. Shareholders .

Answer: C.Society
117. The audit of financial records to ascertain the correctness of taxable profits means
A. Tax audit

B. Management audit

C. Profit audit

D. Financial audit .

Answer: A.Tax audit
118. According to section 44AB,Tax Audit is to be conducted by an
A. Internal auditor

B. Chartered Accountant

C. Accountant

D. None of the above .

Answer: B.Chartered Accountant
119. Future oriented, independent and systematic evaluation of the activities of all levels of management for the purpose of improving organizational profitability and increasing the attainment of other organizational objectives is known as
A. Cost audit

B. Tax audit

C. Management audit

D. Human resources audit .

Answer: C.Management audit
120. Objective of management audit are
A. To evaluate the performance by relating inputs with output

B. To obtain efficiency and effectiveness of management

C. Only (b)

D. (a) and (b).

Answer: D.(a) and (b).
121. The corporate governance structure of a company reflects the individual companies is
A. Cultural and economic system

B. Legal and business system

C. Social and regulatory system

D. All of the above

Answer: D.All of the above
122. The corporate governance framework consists of explicit and implicit contracts between
A. Company and the stakeholders

B. Management and State government

C. Stakeholders and Management

D. None of the above

Answer: A.Company and the stakeholders
123. The primary stakeholders are:
A. Customers

B. Suppliers.

C. Shareholders

D. Creditors

Answer: C.Shareholders
124. The goal of corporate governance and business ethics education is to:
A. Teach students their professional accountability and to uphold their personal Integrity to society

B. Change the way in which ethics is taught to students

C. Create more ethics standards by which corporate professionals must operate

D. Increase the workload for accounting students

Answer: C.Create more ethics standards by which corporate professionals must operate
125. Good corporate governance helps to minimize:
A. Wastages

B. Corruption

C. Risks and mismanagement

D. All of the above

Answer: D.All of the above

126. Benefits of Corporate governance:
A. Lowers the capital cost

B. Ensures corporate success and economic growth

C. Gives positive impact on the share price

D. All of the above

Answer: D.All of the above
127. The framework for establishing good corporate governance and accountability was originally set up by the
A. Nestlé Committee

B. Cadbury Committee

C. c)Rowntree Committee

D. Thornton Committee

Answer: B.Cadbury Committee
128. Which of the following is not one the underlying principles of the corporate governance Combined Code of Practice?
A. Accountability

B. Acceptability

C. Openness

D. Integrity

Answer: B.Acceptability
129. Which of the following is not pillars of corporate Governance
A. Accountability

B. Reliability

C. Fairness

D. Transparency

Answer: B.Reliability
130. The theory based on the concept of separation of ownership and control.
A. Agency Theory

B. Stewardship Theory

C. Stakeholder Theory

D. None of the above

Answer: A.Agency Theory
131. There is no conflict of interest between the shareholders and BoD and Managers
A. Agency Theory

B. Stewardship Theory

C. Stakeholder Theory

D. None of the above

Answer: B.Stewardship Theory
132. The key players of Anglo-Saxon model of Corporate Governance
A. Management, directors and shareholders

B. Banks and shareholders

C. Partner, keiretsu, management and Government

D. Government

Answer: A.Management, directors and shareholders
133. ________is transaction in securities of the company by an insider on the basis of unpublished price sensitive information
A. Insider trading

B. Outsider trading

C. Investor trading

D. None of the above

Answer: A.Insider trading
134. A person who exposes any kind of information or activity that is deemed illegal, unethical, or not correct within an organisation that is either private or public
A. Whistle blower

B. Legal protector

C. Broker

D. None of the above

Answer: A.Whistle blower
135. Which of the following is not rating agencies?
A. CRISIL‟s Governance and Value Creation rating

B. CARE‟s Corporate Governance Rating

C. ICRA‟s Corporate Governance Rating

D. ICICI‟s Corporate Governance Rating

Answer: D.ICICI‟s Corporate Governance Rating
136. Directors service contracts should not exceed three years withoutshareholder‟s approval
A. Cadbury Report

B. Greenbury Report

C. Hampel Report

D. Smith Report

Answer: A.Cadbury Report
137. The primary stakeholders are
A. Customers.

B. Suppliers.

C. Shareholders.

D. Creditors

Answer: C.Shareholders.
138. Which of the following is not a model of corporate governance?
A. American model

B. English model

C. Indian model

D. Japanese model

Answer: B.English model
139. In which of the following countries German Model of corporate governance isnot prevalent
A. Switzerland

B. Austria

C. Poland

D. Netherland

Answer: C.Poland
140. Which of the following committee is appointed under the initiative ofGovernment of India on corporate governance?
A. Kumar Mangalam Birla Committee

B. Naresh Chandra Committee

C. Narayana Murthy Committee

D. None of the Above

Answer: B.Naresh Chandra Committee
141. Which of the following is not related to corporate governance reforms inIndia?
A. Enacting the Companies Act, 2013

B. Setting up of Securities Exchange Board of India

C. Scrapping of the Capital Issues Control Act, 1947

D. Banking Regulation Act, 1949.

Answer: D.Banking Regulation Act, 1949.
142. Which of the following statement is most appropriate regarding common governance problems in corporate failures
A. Failure of Board of Directors

B. Failure of Internal Control

C. Inadequate Regulatory Mechanisms

D. All of the Above

Answer: D.All of the Above
143. Which of the following is the major corporate collapses arising out of scam in India
A. Kingfisher Airlines

B. Enron

C. WorldCom

D. Maxwell Communication

Answer: A.Kingfisher Airlines
144. Corporate governance code in the United Kingdom was set up in 1992 by the
A. Thornton Committee

B. Rowntree Committee

C. Cadbury Committee

D. Nestlé Committee

Answer: C.Cadbury Committee
145. The four pillars /principles of corporate governance
A. Accountability, fairness, transparency and independence

B. Accountability, agency, transparency and regulatory

C. Regulatory, fairness, independence and transparency

D. Accountability, cooperation, fairness and independence

Answer: A.Accountability, fairness, transparency and independence
146. Stakeholders in the Stakeholder Theory are divided into primary and secondary stakeholders. Primary stakeholders are –
A. Environmentalists, governments, media

B. Employees, suppliers, customers

C. Both (a) & (b)

D. Only (b)

Answer: D.Only (b)
147. This committee laid down guidelines to ensure independence of auditors and recommended rotation of auditors.
A. Narayan Murthy Committee set up by SEBI in 2003

B. SEBI‟s Birla Committee chaired by Kumara Manglam Birla in1999

C. Naresh Chandra Committee set up by Department of Company Affairs in 2002

D. Only (a)

Answer: C.Naresh Chandra Committee set up by Department of Company Affairs in 2002
148. The Companies Act, 2013 provisions relating to independent directors
A. At least two-third of the board of the company shall consist of independent directors

B. No stock options can be made to independent directors

C. Audit committee should have independent directors as members

D. Both (a) & (b)

Answer: D.Both (a) & (b)
149. Common governance problems of corporate failures in Developed countries are
i. Unethical business practices
ii. Audit failures
iii. Ambitious acquisitions and takeovers
iv. Remuneration structure
A. i, ii, iv

B. ii, iii, iv

C. i, ii, iii

D. i, ii, iii, iv

Answer: C.i, ii, iii
150. Common governance problems of corporate failures in India are
i. Accounting frauds carried out in collusion with statutory auditors
ii. Insider trading
iii. Fiduciary failure by the board
iv. Disproportionate compensation paid to executive board members and
senior management.
A. i, ii, iii

B. ii, iii, iv

C. i, iii, iv

D. i, ii, iii, iv

Answer: D.i, ii, iii, iv

151. Which of the following is not a OECD principle
A. The responsibilities of the government and bureaucrats

B. Ensuring the basis for an effective corporate governance framework

C. Disclosure and transparency

D. The equitable treatment of shareholders

Answer: A.The responsibilities of the government and bureaucrats
152. What does the Sarbanes-Oxley Act of 2002 stipulates?
A. The company should appoint independent financial experts to its audit committee

B. A public account oversight board to be created

C. CEO and CFO sign off the company‟s financial statements

D. All of the above

Answer: D.All of the above
153. We need to conduct management audit for
A. Taking over and reviving sick units

B. Helps in foreign collaboration

C. (a) and (b)

D. None of the above .

Answer: C.(a) and (b)
154. EDP audit means when an audit is conducted in a computer information systems (CIS) environment. According to SA-401
A. ASS-29

B. AAS-29

C. ASS-28

D. AAS-28

Answer: A.ASS-29
155. Corporate governance is the interaction between various participants inshaping company‟s performance. The participants included are
A. Shareholders

B. Board of directors

C. Company‟s management

D. All of the above.

Answer: D.All of the above.
156. The pillars of corporate governance are
A. Accountability,fairness

B. Fairness, transparency and responsibility

C. Responsibility, transparency only

D. (a) and (b)

Answer: D.(a) and (b)
157. The regulatory framework of corporate governance in India is three tiered comprising of the
A. MCA, SEBI and Stock Exchanges.(SE)

B. MCA, SEBI and FERA

C. SEBI, FEMA and Stock Exchanges(SE)

D. SCRA, MCA and Chartered Accountant Act.

Answer: A.MCA, SEBI and Stock Exchanges.(SE)
158. The focus of the reforms in corporate governance in India is on
A. Developing an efficient capital market

B. Promoting shareholders‟ democracy

C. (a) and (b)

D. None of the above.

Answer: C.(a) and (b)
159. Corporate scams or scandals arise with the disclosure of
A. Misdeeds by trusted executives of large public corporations

B. Misdeeds by trusted executive s of small public corporations

C. (a) and (b)

D. Only (a)

Answer: A.Misdeeds by trusted executives of large public corporations
160. Satyam computer services Ltd. was founded in 1987 by RamalingaRaju and his brother as aprivate company with just
A. 10 employees

B. 25 employees

C. 20 employees

D. 15 employees.

Answer: C.20 employees
161. What is meant by the phrase CSR?
A. Corporate Social Responsibility

B. Company Social Responsibility

C. Corporate Society Responsibility

D. (d)Company Society Responsibility

Answer: A.Corporate Social Responsibility
162. An organization‟s appropriate tone at the top promoting ethical conduct is an example
A. Ethics sensitivity

B. Ethics incentives

C. Ethical behavior

D. Consequentialist.

Answer: C.Ethical behavior
163. Which of the following does the term Corporate Social Responsibility relate to?
A. Environment practice

B. Ethical conduct

C. Human rights & employee relation

D. All of the above

Answer: D.All of the above
164. Which is the element of business ethics?
A. A discipline

B. It is an art & science

C. Good intention

D. All of the above

Answer: D.All of the above
165. The major aspects of environmental sustainability are:
A. Role of packaging

B. Role of clean energy

C. Role of environmental reporting

D. All of the above

Answer: D.All of the above
166. Section 135 of the Companies Act 2013 provides that the constitution of CSR committee is mandatory in company having a net worth of
A. Rs 100 crore

B. Rs 500 crore

C. Rs 600 crore

D. Rs 300 crore

Answer: B.Rs 500 crore
167. The CSR committee must be composed of
A. 3 or more Directors

B. Only 1 director

C. 2 Directors

D. No Director

Answer: A.3 or more Directors
168. Which of the following is not a role of the CSR committee?
A. Formulate a CSR Policy indicating the activities as per Schedule VII to the Act

B. Recommend the policy to Board of the Company

C. Does not have outside relationships with other directors

D. Recommend the amount of expenditure on the activities

Answer: C.Does not have outside relationships with other directors
169. Which of the following CSR provision is not applicable as per sec 135 of the Companies Act 2013?
A. Companies having net worth of rupees 500 hundred crore or more

B. Companies having turnover of rupees 1000 crore or more

C. Companies having net profit of rupees 5 crore or more

D. None of the above

Answer: D.None of the above
170. The word Philanthropy has been derived from Greek word „Philanthropia‟ which means
A. Love for mankind

B. Love for environment

C. Love for animals

D. None of the above

Answer: A.Love for mankind
171. Business approach that creates long term value for the company by incorporating economic, environmental and social dimensions into its core business decisions

A. Corporate philanthropy

B. Corporate Sustainability

C. Corporate Social Responsibility

D. None of the above

Answer: B.Corporate Sustainability
172. The business ethics is also known as
A. Corporate philanthropy

B. Corporate Social Responsibility

C. Corporate Ethics

D. None of the above

Answer: C.Corporate Ethics
173. Corporate governance is primarily about
A. values

B. rules

C. profits

D. legal framework

Answer: A.values
174. Which of the following is ingredients of environmental CSR?
A. Elimination of waste and emission

B. Maximizing energy efficiency

C. Minimizing practices that may adversely affect use of natural resources

D. All of the above

Answer: D.All of the above
175. Which of the following activities can be done by the company to achieve itsCSR obligations?
A. Eradicating extreme hunger and poverty

B. Promotion of education

C. Promoting gender equality and empowering women

D. All of the above

Answer: D.All of the above

176. The functions of the CSR Committee
A. Formulate and recommend to the Board

B. Recommend the amount of the expenditure to be incurred on the activities referred to in clause(a)

C. Monitor the CSR Policy of the company from time to time

D. All of the above

Answer: D.All of the above
177. Corporate Social Responsibility includes
A. Corporate Sustainability

B. Giving back to host community

C. Building essential social infrastructure

D. All of the above

Answer: D.All of the above
178. The concept of a triple bottom line encompasses
A. Economic concern

B. Social Concern

C. Environmental concern

D. All of the above

Answer: D.All of the above
179. Corporate Social Responsibility has been regulated by of the Companies Act, 2013
A. Section 135

B. Section 154

C. Section 134

D. Section 153

Answer: A.Section 135
180. Which of the following is not related to attributes of corporate philanthropy?
A. It focuses on treating the cause of a problem

B. It is done through a corporation‟s own non-profit entity

C. Human resources to take care of the employees

D. Funding for corporate philanthropy mainly comes from the company‟s contributions

Answer: C.Human resources to take care of the employees
181. The acronym CSR stands for
A. Corporate Search and Rescue

B. Corporate Social Responsibility

C. Corporate Sensitive Reliability

D. Corporate Social Reality

Answer: B.Corporate Social Responsibility
182. Corporation are regarded as in the eyes of the law
A. Artificial person

B. Natural person

C. Fictitious person

D. None of the above

Answer: A.Artificial person
183. Which of the following is not a model of CSR?
A. Shareholder Value Theory

B. Creating Shared Value model

C. Indian model

D. Carroll‟s model

Answer: C.Indian model
184. The stakeholder view of social responsibility states that organisations mustrespond to the needs of
A. employees and customers

B. shareholders and owners

C. all interested parties

D. all those who might sue the organisation

Answer: C.all interested parties
185. Corporate social responsibility provides a wide range of benefits for companies in terms of
A. Increased brand value and reputation

B. Increased attraction and retention of employees

C. Easier availability of finance

D. All of the above

Answer: D.All of the above
186. The act of a corporate to five gifts/ charitable contributions to communities, universities, etc. that do not necessarily provide any economic benefit but helps in generating goodwill among employees, customers and the local community.
A. Corporate responsibility

B. Corporate philanthropy

C. Business ethics

D. Corporate sustainability

Answer: B.Corporate philanthropy
187. The three elements of „triple bottom line‟ (TBL) coined by Elkington are
i. Economic sustainability
ii. Social sustainability
iii. Corporate sustainability
iv. Environment sustainability
A. i, ii, iii

B. i, iii, iv

C. i, ii, iv

D. ii, iii, iv

Answer: C.i, ii, iv
188. which of the following statements are true
i. CSR has its roots in business ethics
ii. CSR and business ethics are conceptually different
iii. CSR and business ethics are synonymous
iv. CSR and business ethics can be used interchangeably
A. i and ii

B. ii and iii

C. i and iv

D. iii and iv

Answer: A.i and ii
189. Today stakeholders are increasingly demanding that businesses take up environmental stewardship as a part of CSR to reduce carbon footprint of the business through
A. Sustainable packaging

B. Good water management

C. Better waste management including emissions from plants

D. All of the above

Answer: D.All of the above
190. Section 135 of the Companies Act, 2013 has laid down that all companies incorporated in India having a net worth of INR 500 crore or more, must spend a percentage of the average net profits made during every block of three years. What is the percentage?
A. 5%

B. 3.5%

C. 2%

D. 3%

Answer: C.2%
191. The CSR projects/activities outlined in the Schedule VII of the Companies Act, 2013 are
i. Promoting education
ii. Eradicating hunger, poverty & malnutrition
iii. Protection of national heritage, art and culture
iv. Ensuring environmental sustainability
A. Only ii and iii

B. All of the above

C. None of the above

D. i, ii and iv

Answer: B.All of the above
192. The members of the corporate social responsibility committee will beappointed by
A. Board of directors

B. Shareholders

C. Managing director

D. Chief Executive Officer

Answer: A.Board of directors
193. The governance flaws of collapsed companies may be happened due to
A. Failure of the Board of Directors

B. Flaws in External Audit

C. Dominating Dishonest CEO

D. All of the above.

Answer: D.All of the above.
194. ——– refers to a set of prescriptions and practices that provide guidelines with regards to the effective control of a company in the best interest of its shareholders and other stakeholders.
A. EDP

B. Corporate governance code

C. Corporate reforms

D. Auditing Standards

Answer: B.Corporate governance code
195. A commitment to improve community well –being through discretionary business practices and contributions of corporate resources is called Corporate Social Responsibility. This definition is given by
A. McGuire

B. Mallen Baker

C. Phillip Kohler and Nancy Lee

D. Harvard school.

Answer: A.McGuire
196. Some common forms of corporate philantrophy are
A. Cash donations

B. In-kind donations

C. Both (a) and (b)

D. None of the above.

Answer: C.Both (a) and (b)
197. The Triple Bottom line (TBL) which are interlinked are found in
A. Corporate philanthropy

B. Corporate social Responsibility

C. Corporate governance

D. Corporate sustainability.

Answer: D.Corporate sustainability.
198. ———–is defined as the duty to cover environmental implications of operations, products and facilities of company.
A. Corporate social responsibility

B. Environmental aspect of Corporate Social Responsibility

C. Corporate sustainability

D. Corporate philanthropy.

Answer: B.Environmental aspect of Corporate Social Responsibility

199. The CSR committee shall
A. Formulate and recommend to the Board of Corporate Social Responsibility which shall indicate the activities to be undertaken by the company

B. Monitor the Crporate Social Responsibility of the company

C. Both (a) and (b)

D. None of the above.

Answer: C.Both (a) and (b)

200. Giving back to host communities is under the notions of
A. Corporate Social Responsibility

B. Business ethics

C. Management audit

D. Electronic Data Processing

Answer: A.Corporate Social Responsibility

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