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Test Paper 5

The document contains 7 questions in a test paper on topics related to dividend, accounts of companies and audit and auditors. The questions cover various scenarios related to appointment of auditors, internal auditors, CSR expenditure and declaration of dividend by companies.

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45 views

Test Paper 5

The document contains 7 questions in a test paper on topics related to dividend, accounts of companies and audit and auditors. The questions cover various scenarios related to appointment of auditors, internal auditors, CSR expenditure and declaration of dividend by companies.

Uploaded by

divyaagrawal701
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Test Paper – 5

Chapters – Dividend, Accounts of Companies and Audit and Auditors


Marks - 25 marks
Time – 1 hr 15 mins
Note – All questions are mandatory.

Question 1 – 4 marks
Ram & Hanuman Associates, Chartered Accountants in practice, have been
appointed as Statutory Auditor of Krishna Ltd. for the accounting year
2023-2024. Mr. Hanuman, a partner of Ram & Hanuman Associates, holds
100 equity shares of Shiva Ltd., a subsidiary company of Krishna Ltd. Is
such appointment valid as per the provision of Companies Act?

Question 2 – 3 marks
Nick Ltd. is a subsidiary of Ajanta Ltd., whose 20% shares have been held
by Central Government, 25% by Uttar Pradesh Government & 10% by
Madhya Pradesh Government. Nick Ltd. appointed Mr. Prem as its statutory
auditor. Examine the validity of such appointment

Question 3 – 4 marks
Contravene Ltd. appointed CA Innocent as an auditor for the company for
the current financial year. Further the company offered him the services
of actuarial, investment advisory & investment banking which was also
approved by the Board of Directors. Explain in context of Companies Act,
2013.

Question 4 – 4 marks
PQR Private Limited operates as a manufacturing company, generating a
turnover of Rs. 150 crore and holds an outstanding loan of Rs. 75 crore from
a public financial institution solely in the previous financial year (with a total
loan availed of Rs. 110 crore, but Rs. 35 crore were repaid during the same
year). The company's Board has delegated the authority to Chief Executive
Officer (CEO) to designate an internal auditor to conduct internal audit.
However, the CEO believes that the company is not legally obligated to have
an internal auditor. Analyse the accuracy of the CEO's perspective by
referring to the provisions outlined in the Companies Act, 2013. What would
be your response if the Board of Directors wanted to appoint the Mr.
Nagendra (an ex- employee who is a qualified Chartered Accountant) as an
internal auditor?
Question 5 – 3 marks
Mary Ltd is a listed company having turnover of Rs. 1200 crores during the
financial year 2016-17. The CSR committee of the Board formulated and
recommended a CSR project which was approved by the Board. The company
finalised the project under its CSR initiatives which require funds @ 5 % of
average net profit of the company for last three financial years. Will such
excess expense be counted in subsequent financial years as a part of CSR
expenditure? Advise the company.

Question 6 – 2 marks
According to section 135 of the Act the company is given six monthsÕ
timeline to transfer amount to unspent CSR Fund, whether the company can
spend this amount in the said period of six months such that the company
will be free from the liability to transfer amount to said fund?
Question 7 – 5 marks
AB Limited is a public company having its registered office in Coimbatore.
The company has incurred a net loss of Rs. 20 lakhs in the Financial Year (FY)
2019-20. The Board of Directors (BOD) wants to declare dividend for the
FY 2019-20. The balances of the company as per the latest audited financial
statements are as follows:
1. Equity Share Capital (Rs. 10 each) - 100 lakhs
2. General Reserve - 150 lakhs
3. Debenture redemption Reserve - 50 lakhs
The company has not declared any dividend in the preceding three financial
years. Decide whether AB Limited is allowed to declare dividend or not for
the FY 2019-20 by explaining the relevant provisions of the Companies Act
in this regard. If allowed to declare dividend then state the maximum amount
of dividend that can be paid by AB Limited as per the Section 123 of
Companies Act 2013.

MCQs – 5 marks
MCQ 1 – 1 mark
MCQ 2 – 2 marks

MCQ 3 – 2 marks

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