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As per Rule-4(3) of Companies (Cost Records & Audit) Rules, 2014, the requirement for cost audit shall not apply to a company whose revenue from exports, in foreign exchange, exceeds ___ per cent of its total revenue even though it is covered in Rule 3.

50% 60% 75% 80%

As per Section 141(3) read with Rule 10 of Company (Audit and Auditor) Rule, 2014, a person who has been convicted by a court of an offence involving fraud and a period of 10 years has not elapsed from the date of such conviction, is disqualified and not eligible for appointment as a Cost Auditor of a company. The disqualification period is ___.

5 years 7 years 2 years 10 years

Cost of Repairs and Maintenance is measured as per principles and methods defined under:

Cost Accounting Standard 17 Cost Accounting Standard 12 Cost Accounting Standard 13 Cost Accounting Standard 8

As per Cost Accounting Standard -2, the difference between installed capacity and normal capacity is:

Normal Idle Capacity Abnormal Idle Capacity Normal Capacity Actual Capacity

The susceptibility of an assertion about the measurement, assignment, or disclosure of cost to a misstatement that could be material, either individually or when aggregated with other misstatements, before consideration of any related controls, is called as:

Inherent Risk Control Risk Detection Risk Material Risk

Cost Auditing Standard 103 deals with:

Planning an Audit of Cost Statements Documentation of Audit of Cost Statements, Records etc. Overall objectives of the Independent Cost Auditor and the Conduct of an Audit Knowledge of Business, its processes and the Business Environment

Cost of Self-generation Utilities for own consumption shall comprise of:

Administrative Overheads Distribution Cost Factory Overheads None of the above

Several Checks and Controls exercised in a business to ensure its efficient working is known as:

Internal Check Internal Control Internal Audit Interim Check

When planning a cost audit, the Cost Auditor’s knowledge about the design of internal control activities should be used to:

Identify the types of possible misstatements that could occur. Assess the operational proficiency of internal control. Determine whether controls can be circumvented by collusion. Document the assessed level of control risk.

Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to:

Three years. Five years. Seven years. Ten years.

T Ltd., is a newly started company. It has the following forecast figures for its first year of trading:

Sales = ₹40,00,000,
Purchases = ₹32,00,000,
Average Receivables = ₹3,20,000,
Average Inventory = ₹4,50,000,
Average Payables = ₹2,50,000,
Average Overdraft = ₹4,50,000,
Gross Profit Margin = 30%

Industry Average Data:
Inventory Days = 53,
Receivables Days = 23,
Payables Days = 47,
Current Ratio = 1.33

Assume there are 365 days in the year.
Choose the correct option based on the above information:

(i) The Cash Operating Cycle for T Ltd. is:

65 days 59 days 29 days 88 days

(ii) Current Ratio of T Ltd. is:

1.10 times 1.25 times 1.00 times 1.30 times

(iii) Quick Ratio of T Ltd. is:

1.00 times 0.46 times 0.60 times 1.20 times

(iv) Sales to Working Capital Ratio is:

5.60 times 6.30 times 7.69 times 5.75 times

(v) From the above calculations and the given scenario, which one of the statements is most correct?

The length of the Cash Operating Cycle is longer than the industry average, which is 45 days, and is likely to lead to liquidity problems. Liquidity position is favourable. Liquidity position is better than the industry standard. Resources are efficiently utilized.

June 24 CMA Paper