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Question Paper

CS Executive- Company Law & Practice Duration: 40

Details: Test-9 (Ch- 9) Marks: 40

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Q-1: According to Section 2(41) of the Act, which of the following statements about the
financial year of a company or body corporate is NOT true?

a) The financial year of a company or body corporate ends on the 31st day of March every year.

b) If a company is incorporated on or after the 1st day of January of a year, its financial year
ends on the 31st day of March of the following year.

c) If a company is a holding company or a subsidiary or associate company of a company

incorporated outside India and is required to follow a different financial year for consolidation
of its accounts outside India, it can apply to the Central Government for approval of a different
financial year.

d) The financial year of a company or body corporate must always align with the calendar year.

Q-2: According to Section 128(1) of the Act, where is a company required to keep its books of
account and other relevant books and papers?

a) The books of account must be kept at the company's registered office.

b) The books of account can be kept at any place in India as decided by the Board of directors.

c) The books of account must be kept at the company's registered office, but other relevant
books and papers can be kept at any place in India.

d) The books of account can be kept at any place in India, and no intimation needs to be filed
with the Registrar of Companies.

Q-3: which of the following statements is NOT true regarding the retention and storage of
electronic records?

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a) The information contained in the records must be retained in the format in which they were
originally generated, sent, or received.

b) The information received from branch offices must be altered to accurately depict what was
originally received.

c) The information in the electronic record of the document must be capable of being displayed
in a legible form.

d) The back-up of the books of account and other books and papers maintained in electronic
mode must be kept in servers physically located in India on a daily basis.

Q-4: What is the minimum amount of fine that can be imposed on the persons referred to in
Section 128(6) of the Act for contravening the provisions mentioned?

a) Five thousand rupees

b) Ten thousand rupees

c) Fifty thousand rupees

d) One lakh rupees

Q-5: Which of the following statements is true regarding the form of financial statements
according to Schedule III?

a) The financial statements are standardized and should be the same for all companies.

b) Different forms are provided for different classes of companies.

c) Schedule III provides detailed instructions for the preparation of cash flow statements.

d) The form of financial statements is determined by the company's auditor.

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Q-6: Under Section 129A, what are the requirements for unlisted companies regarding their
periodical financial statements?

a) They are required to prepare audited financial statements on an annual basis.

b) They must obtain approval from the Registrar of Companies for their financial results.

c) They need to file their periodical financial results with the Registrar within 30 days of
completion of the relevant period.

d) They are exempted from preparing and filing financial statements.

Q-7: Under Section 131 of the Act, when can directors prepare revised financial statements or a
revised Board's report?

a) If the company's financial statements or Board's report have not been filed with the Registrar
of Companies.

b) If it appears to the directors that the company's financial statements or Board's report do not
comply with the requirements of Section 129 or Section 134 of the Act.

c) If the Central Government and Income-tax authorities request a revision of the financial
statements or Board's report.

d) If the revisions are confined to the correction of spelling or grammatical errors in the
previous financial statements or report.

Q-8: Which of the following statements is true regarding the National Financial Reporting
Authority (NFRA)?

a) NFRA has the power to prescribe accounting and auditing standards.

b) NFRA is a government body responsible for financial regulation in India.

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c) NFRA was established under the Companies Act, 1956.

d) NFRA is primarily focused on monitoring and enforcing compliance with auditing and
accounting standards.

Q-9: Which authority recommends the standards of accounting to be prescribed by the Central
Government?

a) Institute of Chartered Accountants of India

b) National Financial Reporting Authority

c) Ministry of Corporate Affairs

d) National Advisory Committee on Accounting Standards

Q-10: Which set of accounting standards came into force on 1st April 2015 in India?

a) Indian Accounting Standards (Ind AS)

b) International Financial Reporting Standards (IFRS)

c) Generally Accepted Accounting Principles (GAAP)

d) Companies (Accounting Standards) Rules, 2006

Q-11: In which situation is a special notice NOT required for appointing an auditor other than
the retiring auditor?

a) When the retiring auditor has completed a consecutive tenure of five years.

b) When the retiring auditor has completed a consecutive tenure of ten years.

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c) When the retiring auditor requests for the special notice.

d) When the company receives a representation from the auditor.

Q-12: What action should a company take upon receiving a special notice for removing the
auditor?

a) Inform the retiring auditor without any further action.

b) Include the representation of the retiring auditor in the notice of resolution.

c) File a copy of the representation with the Registrar.

d) Circulate the representation to the members along with the notice of meeting.

Q-13: Which of the following statements is true regarding Secretarial Audit?

a) It is a financial audit conducted by a company secretary in practice.

b) It focuses on evaluating and improving the effectiveness of risk management.

c) It is only mandatory for listed companies under the Companies Act, 2013.

d) It is primarily aimed at detecting fraud within an organization.

Q-14: Who is authorized to inspect the books of account and other books and papers
maintained by the company within India?

a) Shareholders of the company

b) Any director of the company

c) Officers and employees of the company

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d) Authorized representatives of the National Financial Reporting Authority

Q-15: How often should the proper summarized return of the books of account maintained
outside India be sent to the registered office?

a) Monthly

b) Quarterly

c) Annually

d) On a need-to-know basis

Q-16: What is the penalty for failure to take reasonable steps to secure compliance or
contravention of the provisions of Section 129 of the Companies Act?

a) Imprisonment for a term of one year

b) Fine of fifty thousand rupees

c) Fine of five lakh rupees

d) Imprisonment for a term of one year or fine or both

Q-17: Which of the following companies is not required to prepare consolidated financial
statements under the Accounting Standards?

a) Wholly-owned subsidiary

b) Partially-owned subsidiary

c) Listed company

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d) Non-listed company

Q-18: Under what conditions is a company exempted from preparing consolidated financial
statements?

a) Wholly-owned subsidiary with no objections from other members

b) Partially-owned subsidiary with no objections from other members

c) Securities listed on a stock exchange

d) Compliance with applicable Accounting Standards

Q-19: According to Section 136, if the copies of the audited financial statements are sent less
than twenty-one days before the meeting, they can still be deemed duly sent if it is agreed
upon by:

(a) The majority of members entitled to vote and representing at least 95% of the paid-up share
capital of the company.

(b) The members holding at least 5% of the total voting power exercisable at the meeting.

(c) The chairman of the meeting.

(d) The company secretary.

Q-20: Who can make an application for re-opening or re-casting of books of accounts of a
company?

a) Shareholders of the company

b) Employees of the company

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c) Central Government, Income-tax authorities, SEBI, or other regulatory bodies

d) Auditors of the company

Q-21: According to Section 136 of the Act, who is entitled to receive a copy of the financial
statements of a company?

a) Only the members of the company

b) Only the auditors of the company

c) Only the trustees for the debenture holders

d) Members of the company, trustees for the debenture holders, and other entitled persons

Q-22: Who is entitled to inspect the financial statements and attached documents of a
company?

a) Only the members of the company

b) Only the trustees of the debenture holders

c) Only the auditors of the company

d) Members of the company and trustees of the debenture holders

Q-23: What is the penalty for non-compliance with the provisions of Section 136 of the Act?

a) A penalty of Rs. 25,000 for the company and Rs. 5,000 for each officer in default

b) A penalty of Rs. 50,000 for the company and Rs. 10,000 for each officer in default

c) A penalty of Rs. 10,000 for the company and Rs. 2,500 for each officer in default
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d) A penalty of Rs. 5,000 for the company and Rs. 1,000 for each officer in default

Q-24: Which of the following powers does the National Financial Reporting Authority (NFRA)
have?

a) Power to issue arrest warrants

b) Power to impose criminal penalties

c) Power to investigate professional misconduct

d) Power to regulate stock exchanges

Q-25: What penalties can the National Financial Reporting Authority (NFRA) impose for
professional or other misconduct?

a) Imposing a penalty of up to Rs. 1 lakh for individuals and up to Rs. 5 lakhs for firms

b) Imposing a penalty of up to Rs. 10 lakhs for individuals and up to Rs. 50 lakhs for firms

c) Imposing a penalty of up to Rs. 5 lakhs for individuals and up to Rs. 10 lakhs for firms

d) Imposing a penalty of up to Rs. 50,000 for individuals and up to Rs. 2 lakhs for firms

Q-26: What is the deadline for the Board of Directors to appoint the first auditor of a company,
other than a Government company, after the company's registration?

a) Within 30 days

b) Within 60 days

c) Within 90 days

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d) Within 120 days

Q-27: What is the time limit for the Comptroller and Auditor General (CAG) to appoint the first
auditor in a Government Company?

a) Within 30 days

b) Within 60 days

c) Within 90 days

d) Within 180 days

Q-28: Who is responsible for recommending the replacement of an incumbent auditor on the
expiry of their term?

a) Audit Committee

b) Board of Directors

c) Members in the annual general meeting

d) Comptroller and Auditor General (CAG)

Q-29: Which of the following is a condition for eligibility of an incoming auditor/audit firm in
the rotation of auditors?

a) The incoming auditor/audit firm must have at least 10 years of experience.

b) The incoming auditor/audit firm must be associated with the outgoing auditor/audit firm.

c) The incoming auditor/audit firm must operate under a different brand name.

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d) The incoming auditor/audit firm must be a government-appointed auditor.

Q-30: Who has the authority to change the auditor of a company if they are found to have
acted fraudulently or colluded in any fraud?

a) Audit Committee

b) Board of Directors

c) Central Government

d) National Company Law Tribunal (NCLT)

Q-31: What is the consequence for an auditor, whether an individual or a firm, against whom a
final order has been passed by the NCLT for fraudulent activities?

a) They will face imprisonment.

b) They will be fined heavily.

c) They will be disqualified from being an auditor for 5 years.

d) They will be banned from working in the auditing profession.

Q-32: Which of the following persons is NOT eligible for appointment as an auditor of a
company?

a) A body corporate, except LLP

b) An officer or employee of the company

c) A person who is a partner, or in the employment, of an officer or employee of the company

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d) A person who holds securities or interests in the company worth more than one lakh rupees

Q-33: How many companies can a person or a partner of a firm hold appointments as an
auditor at the time of appointment or reappointment?

a) Up to 5 companies

b) Up to 10 companies

c) Up to 15 companies

d) Up to 20 companies

Q-34: Which of the following types of companies is NOT covered under the applicability of
CARO 2020?

a) Banking company

b) Insurance company

c) Section 8 company

d) Small company

Q-35: According to CARO 2020, the auditor's report of a company must contain details about:

a) Revaluation of property, plant, and equipment or intangible assets, if there is more than a
10% change

b) Details of inventory discrepancies of 5% or more found during physical verification

c) Quarterly returns filed by the company with the Income Tax Department

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d) Details of the salaries and benefits provided to the company's employees

Q-36: Which of the following statements is true about Secretarial Audit?

a) It is conducted by the company's internal audit department.

b) It focuses on financial record-keeping and reporting.

c) It is a compliance audit to check adherence to laws and regulations.

d) It is primarily concerned with evaluating risk management practices.

Q-37: Who is responsible for conducting the secretarial audit?

a) Chief Financial Officer (CFO)

b) Board of Directors

c) External Auditor

d) Company Secretary in practice

Q-38: Which of the following statements is true regarding the cost audit of companies?

a) Cost audit is mandatory for all companies engaged in production, processing, manufacturing,
or mining activities.

b) Cost records are required to be maintained only for companies with a turnover above a
certain threshold.

c) The Central Government can order a cost audit for companies covered under Section 148(1)
of the Act and with a specified net worth or turnover.

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d) Cost audit is applicable only to companies with a net worth above a certain threshold.

Q-39: Who appoints the auditor for a Government company or any other company owned or
controlled by the Central Government or State Government?

a) The company's board of directors

b) The Comptroller and Auditor General of India

c) The Ministry of Corporate Affairs

d) The company's shareholders

Q-40: What is the time limit within which the Comptroller and Auditor General of India must
submit comments or supplements to the audit report?

a) 30 days from the date of receipt of the audit report

b) 45 days from the date of receipt of the audit report

c) 60 days from the date of receipt of the audit report

d) 90 days from the date of receipt of the audit report

(40 X 1 = 40 = Marks)

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