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MCQ on Corporate Financial Reporting

1. Which of the following is appears in the ‘Value Applied’ section in the value-added statement?
(A) Decrease in stock
(B) Manufacturing & Other Expenses
(C) Depreciation
(D) All of the above

2. _______ represents the economic profits generated by a business above and beyond the minimum return required by all providers of capital.
(A) Shareholder Value Added (SVA)
(B) Economist Value Added (EVA)
(C) Market Makers Value Added (MMVA)
(D) Debt holders Value Added (DVA)

3. If we add ‘Cost of Capital’ ‘Economic Value Added’ we get
(A) Profit After Tax
(B) Net Operating Profit After Tax
(C) Gross Value Added
(D) Earnings before Interest and tax

4. Which of the following is the advantage of the Value Added Statement?
(A) It helps in judging the productivity of the company
(B) It helps in ascertaining result le. profit earned or loss suffered in business during a particular period
(C) It provides up-to-date information about the various assets that the firm possesses and the liabilities the firm owes
(D) It measures the past performance of the business entity and depicts its current financial position

5. Which of the following action can be taken to improve EVA?
(A) Improve Asset Turnover Ratios
(B) Change the capital structure by substituting lower-cost debt for higher-cost equity.
(C) Both (A) and (B)
(D) Neither (A) nor (B)

6. To which type of company the Companies (Auditor’s Report) Order, 2016 (CARO) applies?
(A) Banking company
(B) The Insurance company
(C) One Person Company
(D) None of the above

7. Which of the following is deducted in Value Added Statement in the ‘Value Added’ section?
(A) Other Income
(B) Replacement Reserve
(C) Deferred tax account
(D) None of the above

8. Market value added is the difference between
(A) EPS and Price Earning per share
(B) Cost of capital and economic value added
(C) The Company’s adjusted value for inflation and book value of various assets
(D) The Company’s market and book value of shares

9. 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.
(A) ₹ 5 Crore
(B) ₹ 1 Crore
(C) ₹ 2 Crore
(D) ₹ 10 Crore

10. CARO, 2016 shall not apply to the auditor’s report on
(A) Income statement
(B) Financial statements
(C) Consolidated financial statements
(D) None of the above

11. In the audit report, the auditor expresses his opinion of whether the financial statement of the company gives in conformity with the accounting principles.
(A) True & fair view
(B) Full & fair view
(C) True & reasonable view
(D) Full & reasonable view

12. 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.
(A) Section 192
(B) Section 195
(C) Section 292
(D) Section 295

13. _______ 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.
(A) Economic value added
(B) Value added
(C) Market value-added
(D) Shareholders value-added

14. Value-added can be defined as
(A) Wealth generated by the owners and shareholders of the business entity
(B) Value added by increasing net profit of the company
(C) Wealth generated by the entity through the collective efforts of capital providers, management, and employees
(D) Net increasing in assets of the business organization

15. The auditor of a company is required to give his report in accordance with the provisions of ______ of the Companies Act, 2013.
(A) Section 148
(B) Section 143
(C) Section 149
(D) Section 147

16. The Board of Directors of a company shall approve the financial statement and the Board’s report by means of resolutions passed:
(A) By circulation
(B) Shareholders ordinary resolution
(C) At meetings of the Board
(D) E-meeting

17. Which of the following is not one of the underlying principles of Corporate Governance?
(A) Openness
(B) Integrity
(C) Accountability
(D) Acceptability

18. 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:
(A) Form AOC-1A
(B) Form AOC-2
(C) Form AOC-3
(D) Form AOC-4A

19. Directors’ responsibilities are unlikely to include:
(A) A duty of care
(B) A duty to propose high dividends for shareholders
(C) A fiduciary duty
(D) A duty to keep proper accounting records

20. 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.
(A) 60 days
(B) 30 days
(C) 90 days
(D) 21 days

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