CA MCQ Questions with Answers

Adding the CA prefix to your name will unlock infinite career options for you.

You could start a private practice, join a firm, do a partnership, and even pursue a corporate job.

Unsurprisingly, the latter is one of the most preferred options nowadays.

And If you do decide to go the corporate way, there are several job rules you can pursue, the majority of them are in the areas of Auditing, taxation, statutory, etc.

Now, the application process for these and more such job roles is dramatically different and personalized. But being a chartered accountant, there are some interview questions that you will continue to face regardless of your job domain or offer.

And so this is a quick guide to some of the most commonly asked questions to CAs in most job interviews:

CA MCQ

1.Which body regulates the Chartered Accountancy profession in India?

The Institute of Chartered Accountants of India (ICAI)

SEBI

RBI

The Ministry of Finance directly

2.Under the Companies Act 2013, what is the maximum consecutive term for an individual statutory auditor of a listed company?

One term of five consecutive years

Ten years

Three years

There is no limit

3.What does a qualified audit opinion indicate?

The financial statements are fair except for specific matters identified

The statements are entirely unreliable

The auditor could not form an opinion

The statements are fully compliant

4.What is materiality in an audit context?

Information is material if omitting or misstating it could influence users' economic decisions

Any amount above one lakh

Only balance sheet items

Amounts specified by the client

5.Under Ind AS, how is goodwill arising on acquisition treated?

Tested annually for impairment and not amortised

Amortised over five years

Written off immediately

Revalued each year

6.What is the primary purpose of internal control over financial reporting?

Providing reasonable assurance about the reliability of financial reporting

Guaranteeing no errors occur

Replacing the external audit

Reducing tax liability

7.Which control activity is violated when one person authorises, executes and records a transaction?

Segregation of duties

Physical safeguarding

Independent verification

Documentation standards

8.Under GST in India, what is the input tax credit mechanism?

Tax paid on inputs can be offset against output tax liability

Tax is refunded in cash immediately

Tax on inputs is an expense

Credit is available only for exports

9.What is TDS?

Tax Deducted at Source, collected by the payer at the time of payment or credit

Total Deferred Sum

Tax Due Statement

Trading and Distribution Statement

10.What is deferred tax?

Tax arising from temporary differences between accounting profit and taxable profit

Tax paid after the due date

Advance tax paid in instalments

Tax withheld at source

11.Under Ind AS 115, when is revenue recognised?

When control of goods or services transfers to the customer

When cash is received

When the invoice is raised

At the end of the financial year

12.What does the going concern assumption underpin?

Measuring assets at historical cost and splitting items into current and non-current

Immediate liquidation values

Cash basis accounting

Tax computations only

13.Which statement about the prudence concept is correct?

Losses are anticipated but gains are not recognised until realised

All estimates should be optimistic

Assets should be overstated

Income should be recognised early

14.What is a contingent liability?

A possible obligation depending on an uncertain future event, disclosed but not recognised

A confirmed debt due within a year

A provision recorded in the accounts

An asset held for sale

15.Under the Companies Act 2013, which companies must constitute an audit committee?

Listed companies and certain classes of public companies

All companies

Only private companies

Only companies with foreign investment

16.What is the purpose of an audit trail?

Providing a traceable record from source documents through to financial statements

Reducing the audit fee

Replacing internal controls

Speeding up reporting

17.What is the difference between an operational audit and a statutory audit?

An operational audit assesses efficiency and effectiveness; a statutory audit expresses an opinion on the financial statements

They are the same

An operational audit is legally required

A statutory audit reviews processes only

18.What does professional scepticism require of an auditor?

A questioning mind and critical assessment of evidence

Assuming management is dishonest

Accepting management representations

Testing every transaction

19.What are the main threats to auditor independence?

Self-interest, self-review, advocacy, familiarity and intimidation

Only fee dependence

Only family relationships

Only prior employment

20.What is the accounting treatment for a change in accounting estimate?

Applied prospectively from the current period onwards

Applied retrospectively by restating prior periods

Ignored until the next audit

Charged directly to reserves

21.Which financial statement reconciles opening and closing cash balances?

Cash flow statement

Balance sheet

Statement of profit and loss

Statement of changes in equity

22.Under the indirect method, why is depreciation added back to profit in the cash flow statement?

It is a non-cash expense that reduced profit without any cash outflow

It represents cash received

It is a financing activity

It is a tax adjustment

23.What is the primary purpose of a management representation letter?

Obtaining written confirmation of management's assertions about the financial statements

Replacing audit evidence

Limiting the auditor's liability entirely

Approving the audit fee

24.What does CARO require Indian auditors to do?

Report on specified matters in an annexure to the audit report

Certify tax computations

Value the company's assets

Prepare the financial statements

25.Under Ind AS 116, how does a lessee account for most leases?

By recognising a right-of-use asset and a corresponding lease liability

By expensing lease payments as incurred

By capitalising only finance leases

By disclosing them in the notes only

26.What is the purpose of analytical procedures in an audit?

Evaluating financial information through relationships and trends to identify unusual items

Testing every transaction

Preparing the accounts

Calculating tax

27.What is audit sampling used for?

Applying procedures to less than 100% of items to draw a conclusion about the population

Selecting only large transactions

Avoiding detailed testing

Reducing the audit fee

28.What is the difference between a provision and a reserve?

A provision is a liability of uncertain timing or amount; a reserve is an appropriation of profit

They are the same

A reserve is a liability

A provision is part of equity

29.How should inventory be valued under Ind AS 2?

At the lower of cost and net realisable value

At cost always

At selling price

At replacement cost

31.What is the purpose of a bank reconciliation statement?

Explaining differences between the cash book and the bank statement balances

Calculating interest earned

Valuing investments

Computing tax liability

32.What does the current ratio measure?

Short-term liquidity, as current assets divided by current liabilities

Long-term solvency

Profitability

Asset efficiency

33.What does a debt to equity ratio indicate?

The extent of financial leverage and associated financial risk

The company's profitability

Its liquidity position

Its tax efficiency

34.Under Schedule III of the Companies Act 2013, how must the balance sheet be presented?

In a vertical format with equity and liabilities followed by assets, split into current and non-current

In a horizontal T format

In order of liquidity only

In any format chosen by management

35.What is a fair value measurement under Ind AS 113?

The price to sell an asset or transfer a liability in an orderly transaction between market participants

Historical cost less depreciation

The insured value

The price paid at acquisition

36.What is the auditor's responsibility regarding fraud?

Obtaining reasonable assurance that the statements are free from material misstatement, whether from fraud or error

Detecting all fraud

Preventing fraud

No responsibility, as fraud is management's concern

37.What is a subsequent event in financial reporting?

An event occurring between the reporting date and the date the statements are approved

Any event after the audit report

A prior period item

A contingent liability

38.What does consolidation of financial statements involve?

Combining parent and subsidiary results, eliminating intragroup transactions and balances

Adding the parent and subsidiary figures directly

Reporting only the parent's results

Reporting the largest entity only

39.What is the purpose of an engagement letter?

Documenting the scope, objective, responsibilities and terms of the audit engagement

Confirming the audit opinion

Recording the audit findings

Approving the financial statements

40.Under Indian income tax law, what is the significance of the previous year and assessment year?

Income earned in the previous year is assessed to tax in the following assessment year

They refer to the same twelve months

The assessment year precedes the previous year

Only companies use assessment years

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