Going through the Cost Accounting Records & Cost Audit under the Companies Act, 2013 – Corporate and Management Accounting CS Executive MCQ Questions with Answers you can quickly revise the concepts.
Cost Accounting Records & Cost Audit under the Companies Act, 2013 – Corporate and Management Accounting MCQs
Question 1.
Cost Audit is a critical review undertaken ………… for the purpose of:
(a) Verification of the correctness of cost accounts and
(b) Checking that cost accounting plan is adhered to.
Select the correct answer from the options given below.
(A) (b) only
(B) Either (a) or (b)
(C) (a) only
(D) Both (a) and (b)
Answer:
(D) Both (a) and (b)
Question 2.
The Institute of Cost Accountants of India defines statutory cost audit as, “A system of audit introduced by the for the review, examination and appraisal of the cost accounting records and added information required to be maintained by the specified industries”.
(A) Ministry of Corporate Affairs
(B) Government of India
(C) Parliament of India
(D) President
Answer:
(B) Government of India
Question 3.
Which of the following section of the Companies Act, 2013 deals with ‘ maintenance of costing records?
(A) Section 138
(B) Section 142
(C) Section 146
(D) Section 148
Answer:
(D) Section 148
Question 4.
Provisions of the Section 148 of the Companies Act, 2013 relating to maintenance of costing records applicable to –
(A) Technocrat industries
(B) Companies engaged in the production of notified goods
(C) Companies engaged in providing production of goods or services
(D) Companies engaged in providing production of notified goods or services
Answer:
(D) Companies engaged in providing production of notified goods or services
Question 5.
Cost auditor is appointed by the –
(A) Central Government
(B) Audit Committee
(C) Board of Directors
(D) Shareholders
Answer:
(C) Board of Directors
Question 6.
The cost auditor shall comply with the:
(A) Accounting standard
(B) Cost auditing standards
(C) Cost Accounting standard
(D) All of the above
Answer:
(B) Cost auditing standards
Question 7.
The cost audit report shall be submitted by the cost accountant to the –
(A) Board of Directors of the company
(B) Central Government
(C) Audit Committee
(D) (A) and (C)
Answer:
(A) Board of Directors of the company
Question 8.
Within ……….from receipt of cost audit report from cost auditor, the company shall furnish the cost audit report to the Central Government, along with full information and explanation on every reservation or qualification contained therein.
(A) 30 days
(B) 60 days
(C) 90 days
(D) 180 days
Answer:
(A) 30 days
Question 9.
The base of cost audit report is –
(A) Efficiency and propriety
(B) Profitability and liquidity
(C) True & fair view
(D) Reliability and propriety
Answer
(A) Efficiency and propriety
Question 10.
Every cost auditor, who conducts an audit of the cost records of a company, shall submit the cost audit report along with his or its reservations or qualifications or observations or suggestions, if any, in
(A) Form CRA-3
(B) Form CRA-2
(C) Form CRA-2A
(D) Form CRA-3A
Answer
(A) Form CRA-3
Question 11.
As per Rule 3 of the Companies (Cost Records & Audit) Rules, 2014, for the purposes of Section 148(1), the class of companies, including foreign companies, engaged in the production of the goods or providing services, having an overall turnover from all its products and services of during the immediately preceding financial year, shall include cost records for such products or services in their books of account,……..
(A) ₹ 50 Crore or more
(B) ₹ 35 Crore or more
(C) ₹ 25 Crore or more
(D) ₹ 45 Crore or more
Answer:
(B) ₹ 35 Crore or more
Question 12.
To which of the following companies maintenance of cost records is compulsory under the Companies (Cost Records & Audit) Rules, 2014
(A) Foreign companies having only liaison offices.
(B) A company which is classified as a micro enterprise or a small enterprise including as per the turnover criteria u/s 7(9) of the Micro, Small & Medium Enterprises Development Act, 2006.
(C) Company having turnover above ₹ 25 Crore but below ₹ 30 Crore
(D) None of the above
Answer:
(D) None of the above
Question 13.
As per Rule 4 of the Companies (Cost Records & Audit) Rules, 2014, every company specified in item (A) of Rule 3 (ie. industries in Regulated Sectors) shall get its cost records audited if the overall annual turnover of the company from all its products and services during the immediately preceding financial year is and the aggregate turnover of the individual product or service for which cost records are required to be maintained under Rule 3 is …………..
(A) ₹ 50 Crore or more; ₹ 25 Crore or more
(B) ₹ 25 Crore or more; ₹ 50 Crore or more
(C) ₹ 100 Crore or more; ₹ 150 Crore or more
(D) ₹ 35 Crore or more; ₹ 50 Crore or more
Answer:
(A) ₹ 50 Crore or more; ₹ 25 Crore or more
Question 14.
As per Rule 4 of the Companies (Cost Records & Audit) Rules, 2014, every company specified in item (B) of Rule 3 (i.e. industries in Non-Regulated Sectors) shall get its cost records audited if the overall annual turnover of the company from all its products and services during the immediately preceding financial year is and the aggregate turnover of the individual product or service for which cost records are required to be maintained under Rule 3 is
(A) ₹ 50 Crore or more; ₹ 25 Crore or more.
(B) ₹ 100 Crore or more; ₹ 200 Crore or more.
(C) ₹ 100 Crore or more; ₹ 35 Crore or more.
(D) ₹ 60 Crore or more; ₹ 35 Crore or more.
Answer:
(C) ₹ 100 Crore or more; ₹ 35 Crore or more.
Question 15.
The requirement for cost audit shall not apply to a company –
(A) Whose revenue from exports, in foreign exchange, exceeds 75% of its total revenue
(B) Which is operating from a Special Economic Zone
(C) Which is engaged in generation of electricity for captive consumption through Captive Generating Plant
(D) All of the above
Answer:
(D) All of the above
Question 16.
Every specified company including all units and branches thereof shall maintain cost records in ………..in respect of each
financial year.
(A) Form CRA-5
(B) Form CRA-1
(C) Form CRA-4
(D) Form CRA-2
Answer:
(B) Form CRA-1
Question 17.
Specified category of companies shall within ……….. of the commencement of every financial year, appoint a cost auditor.
(A) 180 days
(B) 90 days
(C) 100 days
(D) 120 days
Answer:
(A) 180 days
Question 18.
Every specified company shall inform the cost auditor concerned of his or its appointment as such and file a notice of such appointment with the Central Government within a period of ……… of the Board meeting in which such appointment is made or within a period of of
the commencement of the financial year, whichever is earlier, through electronic mode, in , along with the fee as specified in the Companies (Registration Offices & Fees) Rules, 2014.
(A) 180 days; 30 days; Form CRA-2
(B) 60 days; 120 days; Form CRA-3
(C) 30 days; 180 days; Form CRA-2
(D) 90 days; 90 days; Form CRA-3
Answer:
(C) 30 days; 180 days; Form CRA-2
Question 19.
The cost auditor may be removed from his office before the expiry of his term, through a after giving a reasonable opportunity of being heard to the Cost Auditor and recording the reasons for such removal in writing.
(A) Board resolution
(B) Special resolution
(C) Ordinary resolution
(D) Shareholders resolution
Answer:
(A) Board resolution
Question 20.
Any causal vacancy in the office of a cost auditor, whether due to resignation, death or removal, shall be filled by the Board of Directors within of occurrence of such vacancy.
(A) 30 days
(B) 1 month
(C) 60 days
(D) 3 months
Answer:
(A) 30 days
Question 21.
Every cost auditor, who conducts an audit of the cost records of a company, shall submit the cost audit report along with his or its reservations or qualifications or observations or suggestions, if any, in –
(A) Form CRA-4
(B) Form CRA-5
(C) Form CRA-3
(D) Form CRA-6
Answer:
(C) Form CRA-3
Question 22.
Every cost auditor shall forward his duly signed report to the Board of Directors of the company within a period of 180 days from –
(A) the date of appointment him as cost
(B) the date of submission of last audit report
(C) the date of submission of cost accounts to the cost auditor by the company
(D) the closure of the financial year to which the report relates
Answer:
(D) the closure of the financial year to which the report relates
Question 23.
CAS-12 deals with –
(A) Repairs & Maintenance Cost
(B) Cost of Service Cost Centre
(C) Interest & Financing Charges
(D) Employee Cost
Answer:
(A) Repairs & Maintenance Cost
Question 24.
CAS-8 deals with –
(A) Packing Material Cost
(B) Cost of Utilities
(C) Cost of Service Cost Centre
(D) Depreciation & Amortization
Answer:
(B) Cost of Utilities
Question 25.
Match the following:
Answer:
(B)
Question 26.
June 2015: The objective of CAS-1 is —
(A) Collection, allocation, apportionment and absorption of overheads
(B) Determination of capacity
(C) Preparation of cost statement
(D) Determination of average/equalized transportation cost
Answer:
(C) Preparation of cost statement
Question 27.
June 2015: Which section of the Companies Act, 2013 deals with audit of cost accounting records –
(A) Section 158
(B) Section 148
(C) Section 168
(D) Section 139
Answer:
(B) Section 148
Question 28.
June 2015: Which of the following is an objective to be achieved through Cost Accounting Standards –
(A) To assist cost accountants in preparation of uniform cost statements
(B) To provide better guidelines on standard cost accounting practices
(C) To help Indian industry and the Government towards better cost management
(D) All of the above
Answer:
(D) All of the above
Question 29.
Dec 2015: The functions of a cost auditor involve —
(A) Examining the inventory records
(B) Capacity utilization
(C) Proper utilization of labour
(D) All of the above
Answer:
(D) All of the above
Question 30.
June 2016: Cost Accounting Standard is related to bringing uniformity and consistency in the principles and methods of determining the selling and distribution overheads with reasonable accuracy.
(A) 10
(B) 12
(C) 15
(D) 4
Answer:
(C) 15
Question 31.
June 2016: Section …………. of the Companies Act, 2013 gives the cost auditor same power as the financial auditor has under section of the Companies Act, 2013.
(A) 148, 143
(B) 143, 148
(C) 147, 148
(D) 143, 144
Answer:
(A) 148, 143
Question 32.
June 2016: Match the following
statements with prescribed forms:
Statements — Forms
(i) Cost Audit Report to Central Government by the company — (a) CRA3
(ii) Cost Auditor to submit report to the Board of Directors — (b) CRA2
(iii) Intimation of appointment of Cost Auditor to MCA by the company — (c) CRA4
Select the correct answer using the codes given below —
Answer:
(B)
Question 33.
June 2016: Which one …………. is not the objective of Cost Accounting Standards —
(A) To bring uniformity and consistency in the principles and methods
(B) To help industry and the Government towards better cost management
(C) To control accounting policies of companies so as to protect investors’ interest
(D) To determine the pollution control costs with reasonable accuracy.
Answer:
(C) To control accounting policies of companies so as to protect investors’ interest
Question 34.
June 2016: Which one of the following is not a statistical technique of cost audit—
(A) Monte-Carlo simulation
(B) Inter-firm comparison
(C) Network analysis
(D) Exponential smoothing
Answer:
(C) Network analysis
Question 35.
Dec 2016: Which one is NOT the objective of Cost Accounting Standards?
(A) To bring uniformity and consistency in the principles and methods.
(B) To help industry and the Government towards better cost management.
(C) To control accounting policies of companies so as to protect investors’ interest
(D) To determine the pollution control costs with reasonable accuracy.
Answer:
(C) To control accounting policies of companies so as to protect investors’ interest
Question 36.
June 2017: The chief objective of cost accounting is to:
(A) Earn more profit
(B) Increase production
(C) Provide information for management for planning and control
(D) Fix the price
Answer:
(C) Provide information for management for planning and control
Question 37.
June 2017: Cost accounting differs from financial accounting in respect of:
(A) Recording Cost
(B) Ascertaining Cost
(C) Control of Cost
(D) Reporting of Cost
Answer:
(D) Reporting of Cost
Question 38.
June 2017: The branch of accounting which primarily deals with processing and accounting data for internal use in a concern is:
(A) Financial accounting
(B) Cost accounting
(C) Management accounting
(D) None of the above
Answer:
(A) Financial accounting
Question 39.
June 2017: A good costing system gives equal emphasis on cost ascertainment and cost
(A) Reduction
(B) Control
(C) Maximization
(D) None of the above
Answer:
(B) Control
Question 40.
Dec 2017: Match the following Cost Accounting Standards with the titles:
CAS — Title
(a) CAS-2 — (1) Material Cost
(b) CAS-6 — (2) Direct Expenses
(c) CAS-1– (3) Pollution Control Cost
(d) CAS-14 (4) Capacity Determination
Codes:
Answer:
(D)
Question 41.
Dec. 2017: Management Accounting and Cost Accounting are ………… to each other.
(A) Complementary
(B) Supplementary
(C) Opposite
(D) Independent
Answer:
(B) Supplementary
Question 42.
Dec. 2017: Practical difficulty in the installation of a costing system is:
(A) Lack of support from top management
(B) Shortage of trained staff
(C) Resistance from existing staff
(D) All of the above
Answer:
(D) All of the above
Question 43.
Dec. 2017: A PSU company shall within 30 days from the date of receipt of the report of the cost auditor furnish explanation on every reservation or qualification contained therein to:
(A) The Registrar
(B) Central Government
(C) The Shareholders
(D) The Parliament
Answer:
(B) Central Government
Question 44.
Dec. 2017: The social purpose of cost audit is:
(A) Detection of errors and frauds
(B) Facilitating the fixation of prices of goods and services
(C) Promoting corporate governance
(D) Inculcation of cost consciousness
Answer:
(B) Facilitating the fixation of prices of goods and services
Question 45.
Dec. 2017: Every PSU company, within a period of 30 days from the date of receipt of cost audit report, furnish to the Centred Government with such report full explanation on every reservation or qualification contained in the report in:
(A) Form CRA-3
(B) Form CRA-4
(C) Form CRA-5
(D) Form CRA-6
Answer:
(B) Form CRA-4
Question 46.
Dec. 2017: Section 148 of the Companies Act, 2013 gives:
(A) No powers to the cost auditor as the financial auditor has u/s 143 of Companies Act, 2013
(B) Same powers to the cost auditor as the financial auditor has u/s 143 of Companies Act, 2013
(C) More powers to the cost auditor than the financial auditor has u/s 143 of Companies Act, 2013
(D) Lesser powers to the cost auditor than the financial auditor has u/s 143 of Companies Act, 2013
Answer:
(B) Same powers to the cost auditor as the financial auditor has u/s 143 of Companies Act, 2013
Question 47.
Dec. 2017: Profitability and productivity measurement technique used by cost auditor while doing cost audit is categorized under:
(A) Economic Techniques
(B) Statistical Techniques
(C) Personnel Techniques
(D) General Techniques
Answer:
(C) Personnel Techniques
Question 48.
Dec. 2017: Non-compliance of which attribute of financial statements makes a company, besides invoking penalties, impairs the confidence of the public investors:
(A) Authenticity
(B) Compliance with Law
(C) Freedom from Bias
(D) All of the above
Answer:
(B) Compliance with Law
Question 49.
June 2018: Every cost auditor, shall submit the cost audit report along with his or its reservation or qualification or suggestions, if any, in form:
(A) CRA-1
(B) CRA-2
(C) CRA-3
(D) CRA-4
Answer:
(D) CRA-4
Question 50.
June 2018: Which of the following statement is not correct?
(A) Cost audit helps to the Government in the fixation of ceiling price of essential commodities.
(B) Cost audit helps in improvement if productivity of human, physical and financial resources of the enterprises.
(C) The cost auditor submits the report in annual general meeting organized by shareholders.
(D) Cost auditor is appointed by the board of directors with the.previous approval of the Central Government.
Answer:
(C) The cost auditor submits the report in annual general meeting organized by shareholders.
Question 51.
June 2018: Every cost auditor shall forward his duly signed report to the board of directors of the company within a period of from the closure of the financial year to which the report relates.
(A) 30 days
(B) 120 days
(C) 90 days
(D) 180 days
Answer:
(D) 180 days
Question 52.
June 2018: Which of the following is not a Statistical technique of Cost Audit?
(A) Activity Sampling
(B) Attitude Survey
(C) Exponential Smoothing
(D) Monte Carlo Simulation
Answer:
(B) Attitude Survey
Question 53.
June 2018: Which of the following is not an objective of the Cost Accounting Standards issued by the Institute of Cost and Works Accountants of India?
(A) Provide better guidelines on standard cost accounting practices.
(B) Enable the comparability of financial statements and improve reliability and usefulness of financial statements.
(C) Assist cost accountants in preparation of uniform costs statements.
(D) Help Indian industry and the Government towards better cost management
Answer:
(B) Enable the comparability of financial statements and improve reliability and usefulness of financial statements.
Question 54.
Dec. 2018: Which of the following Sections of the Companies Act, 2013 deals with the audit of Cost Accounting Records?
(A) Section 128
(B) Section 145
(C) Section 147
(D) Section 148
Answer:
(D) Section 148
Question 55.
Dec. 2018: Remuneration of cost auditor is to be determined in accordance with provisions of:
(A) Section 148(3) of the Companies Act, 2013
(B) Section 143(12) of the Companies Act, 2013
(C) Section 147(1)of the Companies Act, 2013
(D) Section 148(5) of the Companies Act, 2013
Answer:
(A) Section 148(3) of the Companies Act, 2013
Question 56.
Dec. 2018: The Cost Accounting Standard (CAS) concerned with quality control cost is:
(A) CAS-21
(B) CAS-19
(C) CAS-14
(D) CAS-8
Answer:
(A) CAS-21
Question 57.
Dec. 2018: Cost Audit as per the direction of the Central Government shall be conducted by:
(A) A Chartered Accountant in practice
(B) A Cost Accountant in practice
(C) A Chartered Accountant or Cost Accountant in practice
(D) The Auditor General of India
Answer:
(B) A Cost Accountant in practice
Question 58.
Dec. 2018: Which of the following Cost Accounting Standards (CAS) is related to “Depreciation and Amortization”?
(A) CAS-4
(B) CAS-12
(C) CAS-16
(D) CAS-21
Answer:
(C) CAS-16
Question 59.
June 2019: Maintenance of cost records relating to the utilization of materials, labour and other items of cost, in the manner as prescribed by specified class of companies engaged in the:
(A) Production of goods only
(B) Providing services only
(C) Production of such goods and providing such services as may be prescribed
(D) Production of such goods or providing such services as may be prescribed
Answer:
(D) Production of such goods or providing such services as may be prescribed
Question 60.
June 2019: Every cost auditor, who conducts an audit of the cost records of a company, shall submit report in:
(A) General form
(B) Form CRA-1
(C) Form CRA-2
(D) Form CRA-3
Answer:
(C) Form CRA-2
(D) Form CRA-3
Question 61.
June 2019: ‘Cost benefit analysis’ falls under:
(A) Scientific techniques
(B) Accounting or economic techniques
(C) Personnel techniques
(D) Statistical techniques
Answer:
(B) Accounting or economic techniques
Question 62.
June 2019: Which is not a social purpose of cost audit?
(A) Promoting corporate governance
(B) Facilitate in fixation of reasonable prices of goods and services
(C) Improvement of human productivity
(D) Pinpointing areas of inefficiency
Answer:
(A) Promoting corporate governance
Question 63.
June 2019: Principles to determine production overheads relates to:
(A) CAS 5
(B) CAS 7
(C) CAS 3
(D) CAS 2
Answer:
(C) CAS 3
Question 64.
June 2019: …………is concerned with historical records, while is concerned with historical cost with pre-determined cost.
(A) Cost Accounting, Financial Accounting
(B) Financial Accounting, Cost Accounting
(C) Financial Accounting, Management Accounting
(D) Management Accounting, Cost Accounting
Answer:
(B) Financial Accounting, Cost Accounting