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CA Firm Admission Test Question and Answer
CA Firm Admission Test Question and Answer
answer :Statutory audit is done by chartered Accountants, to verify the financial statements fairness and
it is done annually. It ensures that, to the best knowledge of the auditors, financial statements are free
from any misrepresentations and frauds.
2. WHAT IS INTERNAL AUDIT
ANSWER An inspection and verification of the financial records of a company or firm by a member of its
own staff to determine the accuracy and acceptability of its accounting practices.
Q : Definition of audit ?
Answer : An examination and verification of a companys financial and accounting records and supporting
documents by a professional, such as a Certified Public Accountant.
Q :Functions of audit?
Answer : The function of internal audit is concerned with analysis of internal check. The internal audit can
look into the duties of each employee. All employees are provided jobs on the basis of their abilities. The
auditor can test the effectiveness of internal check. Thefunction of internal audit is examining the
application of legal requirements.
The accounts are prepared under certain legal frame work. Verification of accuracy is a function of
internal audit. The accuracy of accounting books and records can be verified with the help auditing
techniques. The audit techniques include inspection, observation, inquiry, confirmation, computation and
review. An auditor can check the accuracy through these techniques.
Q : what is Accounting ?
Answer : The information system that identifies ,records, and communicates the economic events of an
organization to interested users
Q : What is Asset ?
Answer : Assets are a companys resourcesthings the company owns. Examples of assets include
cash, accounts receivable, inventory, prepaid insurance, investments, land, buildings, equipment, and
goodwill. From the accounting equation, we see that the amount of assets must equal the combined
amount of liabilities plus owners (or stockholders) equity.
Q : what is Liabilities ?
Answer : Liabilities are a companys obligationsamounts the company owes. Examples of liabilities
include notes or loans payable, accounts payable, salaries and wages payable, interest payable, and
income taxes payable
Q : definition of revenue?
Answer : this is the total amount of money received by the company for goods sold or services provided
during a certain time period.
Q : definition of expense ?
Answer : Payment of cash or cash-equivalent for goods or services, or a charge against available funds in
settlement of an obligation as evidenced by an invoice, receipt, voucher, or other such document.
Q :What is depreciation?
Answer :A non cash expense that reduces the value of an asset as a result of wear and tear, age, or
obsolescence. Most assets lose their value over time (in other words, they depreciate),
Q : definition of tax ?
Answer : A fee charged (levied) by a government on a product, income, or activity of an organization or
person .
Q : what is VAT?
Answer : Value Added Tax. A consumption tax which is levied at each stage of production based on the
value added to the product at that stage.
Q: what is software ?
Answer : Software is a general term for the various kinds of programs used to operate computers and
related devices.software is not visible .
Q : What is internet ?
Answer : a vast computer network linking smaller computer networks worldwide (usually preceded by the
). The Internet includes commercial, educational, governmental, and other networks, all of which use the
same set of communications protocols.
Q: What is E-commerce?
Answer : E-commerce (electronic commerce or EC) is the buying and selling of goods and services on
the Internet, especially the World Wide Web. In practice, this term and a newer term, e-business, are
often used interchangably. For online retail selling, the term e-tailing is sometimes used.
Q : what is E-mail?
Answer : E-mail (electronic mail) is the exchange of computer-stored messages by telecommunication.
(Some publications spell it email; we prefer the currently more established spelling of e-mail.) E-mail
messages are usually encoded in ASCII text. However, you can also send non-text files, such as graphic
images and sound files, as attachments sent in binary streams.
SOME Elaborate :
ICAB Institute of Chartered Accountants of Bangladesh.
ICMAB Institute of Cost and Management Accountants of Bangladesh.
CIMA Chartered Institute of Management Accountants
ICDDRB International Centre for Diarrhoeal Disease Research, Bangladesh
NBR National Board of Revenue
SEC Securities and Exchange Commission
DSE Dhaka Stock Exchange
CSE, Chittagong Stock Exchange
FBCCI Federation of Bangladesh Chambers of Commerce and Industries
GAAP Generally Accepted Accounting Principles
RAM Random-access memory
SOME ACCOUNTING BODIES
IASB International Accounting Standards Board.
FASB Financial Accounting Standards Board .
ASB Accounting Standards Board .
GASB Governmental Accounting Standards Board .
OTHER ORGANIZATION & BODIES
IFIC International Federation of Accountants
AIA Association of International Accountants
AAA American Accounting Association
ICAEW Institute of Chartered Accountants in England and wales
SAFA South Asian Federation of Accountants
SOME STANDARDS & PRINCIPLES
GAAP Generally Accepted Accounting principles
BAS Bangladesh Accounting Standards
IFRS International Financial reporting Standards
FAS Financial Accounting Standards (USA)
FRS Financial reporting Standards (Uk)
AUDITING STANDARDS & BODIES
ISA international Standards on auditing
Internal Revenue Service (IRS): A government agency that prescribes the rules and regulations that
govern the collection of tax revenues in the U.S.
Securities and Exchange Commission (SEC)S: The government body responsible for regulating the
financial reporting practices of most publicly owned corporations in connection with the buying and selling
of stocks and bonds.
Write-down the partial reduction in the value of an asset, recognizing obsolescence or other losses in
value.
Write-off the total reduction in the value of an asset, recognizing that it no longer has any value. Writedowns and write-offs are non-cash expenses that affect profits
Answer : Indirect tax (such as value added tax or VAT) levied on capital goods, raw materials, spare
parts, services etc., which a business consumes or uses in its operations.
Q : What is output tax ?
Answer : Tax that a seller adds to a buyers bill when they sell particular goods or services. At regular
periods of time, the total tax they have paid when buying goods and services themselves is taken away
from the total output taxes they have paid to arrive at a value-added tax figure that they must pay to the
government
Q :what is tax deduction at source (TDS)
Answer : Tax deducted at source is one of the modes of collecting Income-tax from the assessees. Such
collection of tax is effected at the source when income arises or accrues. Hence where any specified type
of income arises or accrues to any one, the Income-tax Act enjoins on the payer of such income to deduct
a stipulated percentage of such income by way of Income-tax and pay only the balance amount to the
recepient of such income. The tax so deducted at source by the payer, has to be deposited in the
Government treasury to the credit of Central Govt. within the specified time. The tax so deducted from the
income of the recipient is deemed to be payment of Income-tax by the recepient at the time of his
assessment. Income from several sources is subjected to tax deduction at source. Presently this concept
of T.D.S. is also used as an instrument in enlarging the tax base. Some of such income subjected to
T.D.S. are salary, interest, dividend, interest on securities, winnings from lottery, horse races, commission
and brokerage, rent, fees for professional and technical services, payments to non-residents etc.
Q : What is bank reconciliation?
Answer : Analysis and adjustment of differences between the cash balance shown on a bank statement,
and the amount shown in the account holders records. This matching process involves making
allowances for checks issued but not yet presented, and for checks deposited but not yet cleared or
credited. And, if discrepancies persist, finding the cause and bringing the records into agreement.
Q : what is Ratio Analysis?
Answer : A tool used by individuals to conduct a quantitative analysis of information in a companys
financial statements. Ratios are calculated from current year numbers and are then compared to previous
years, other companies, the industry, or even the economy to judge the performance of the company.
Ratio analysis is predominately used by proponents of fundamental analysis.
Q : what is trade discount ?
Answer : a sum or percentage deducted from the list price of a commodity allowed by a manufacturer,
distributor, or wholesaler to a retailer or by one enterprise to another in the same trade
Q: what is cost accounting ?
Answer : a branch of accounting dealing with the classification, recording, allocation, summarization and
reporting of current and prospective costs and analyzing their behaviors. Cost accounting is frequently
used to facilitate internal decision making and provides tools with which management can appraise
performance and control costs of doing business.
Carriage inward :Occurs when a business has to pay for purchased goods to be delivered to its
Premises.
Carriage Outward:Occurs when a business PAYS for sold goods to be delivered to its customers
premises.
might appreciate at 5% per year and a car might depreciate 10% a year. De/Appreciation do NOT have to
be linear. For instance, the moment you drive a new car off the lot, it depreciates a considerable amount
(say 10% of its value). The next year, though, the car might only depreciate 5%. How one determines the
rate of de/appreciation depends on your accounting rules. For tax reasons, many companies have to
abide by strict depreciation laws (For instance, it would be unreasonable to depreciate a factory at 90% of
its value in one year because it would effects the companys profits and thus the taxes that company
pays).
For most consumers, de/appreciation is based on the market value of the asset. Back to the car example:
the moment a new car is driven off the lot, it loses a lot of its value because it is then consider a used
car, so people wont pay as much for it.
Q : what is fiscal year?
Answer : A 12-month period over which a company budgets its spending. A fiscal year does not always
begin in January and end in December; it may run over any period of 12 months. The fiscal year is
referred to by the date in which it ends.
Q : difference between fixed and variable costs?
Answer : Fixed costs are expenses whose total does not change in proportion to the activity of a
business, within the relevant time period. For example, a retailer must pay rent and utility bills irrespective
of sales
Variable costs by contrast change in relation to the activity of a business such as sales or production
volume. In the example of the retailer, variable costs may primarily be composed of inventory (goods
purchased for sale), and the cost of goods is therefore almost entirely variable. In manufacturing, direct
material costs are an example of a variable cost.
Along with variable costs, fixed costs make up one of the two components of total cost. In the most simple
production function, total cost is equal to fixed costs plus variable costs.
Q : definition of MEMORANDUM OF ASSOCIATION?
Answer : The memorandum of association of a company, often simply called the memorandum (and then
often capitalised as an abbreviation for the official name, which is a proper noun and usually includes
other words), is the document that governs the relationship between the company and the outside. It is
one of the documents required to incorporate a company in the United Kingdom, Ireland, India,
Bangladesh, Pakistan and Sri Lanka, and is also used in many of the common law jurisdictions of the
Commonwealth.
Answer : A Memorandum of Association (MOA) is a legal document prepared in the formation and
registration process of a limited liability company to define its relationship with shareholders. The MOA is
accessible to the public and describes the companys name, physical address of registered office, names
of shareholders and the distribution of shares. The MOA and the Articles of Association serve as the
constitution of the company. The MOA is not applied in the U.S. but is a legal requirement for limited
liability companies in European countries including the United Kingdom, France and Netherlands, as well
as some Commonwealth nations.
Q : definition of Articles of Association?
Answer : A document describing the purpose, place of business, and details of a non-profit organization.
Answer : A document that specifies the regulations for a companys operations. The articles of
association define the companys purpose and lays out how tasks are to be accomplished within the
organization, including the process for appointing directors and how financial records will be handled.
Q : what kinds of terms included in Articles of Association?
The Articles can cover a medley of topics, not all of which is required in a countrys law. Although all
terms are not discussed, they may cover:
* the issuing of shares (also called stock), different voting rights attached to different classes of shares
* valuation of intellectual rights, say, the valuations of the IPR of one partner and, in a similar way as how
we value real estate of another partner
* the appointments of directors which shows whether a shareholder dominates or shares equality with
all contributors
* directors meetings the quorum and percentage of vote
* management decisions whether the board manages or a founder
* transferability of shares assignment rights of the founders or other members of the company do
* special voting rights of a Chairman, and his/her mode of election
* the dividend policy a percentage of profits to be declared when there is profit or otherwise
* winding up the conditions, notice to members
* confidentiality of know-how and the founders agreement and penalties for disclosure
* first right of refusal purchase rights and counter-bid by a founder.
Q: definition of memorandum of agreement ?
Answer : A memorandum of agreement (MOA) or cooperative agreement is a document written between
parties to cooperatively work together on an agreed upon project or meet an agreed objective. The
purpose of an MOA is to have a written understanding of the agreement between parties.
An MOA is a good tool to use for many heritage projects. It can be used between agencies, the public
and the federal or state governments, communities, anQ : definition of resident company?
Answer : Entity treated by the jurisdiction, in which it is registered or incorporated or conducts its
business, as resident for exchange control and/or tax purposes
d individuals. AQ : definition of non resident company?
Answer : That is incorporated in a jurisdiction as non-resident for tax purposes.
Answer : A company treated by the jurisdiction in which it is incorporated as non-resident for tax purposes
or exchange control purposes or both
n MOA lays out the ground rules of a positive cooperative effort.
Q : definition of sales tax?
Answer :A sales tax is a consumption tax, usually paid by the consumer at the point of purchase, itemized
separately from the base price, for certain goods and services. The tax amount is usually calculated by
applying a percentage rate to the taxable price of a sale