121. When restrictions that significantly affect the scope of the audit are imposed by the client, the auditor generally should issue which of the following opinion?
A. Qualified opinion
B. Disclaimer of opinion
C. Adverse opinion
D. Unqualified report with ‘an emphasis of matter’ paragraph;

122. The auditor has serious concern about the going concern of the company. It is dependent on company’s obtaining a working capital loan from a bank which has been applied for. The management of the company has made full disclosure of these facts in the notes to the balance sheet. The auditor is satisfied with the level of disclosure. He should issue___________?
A. unqualified opinion
B. unqualified opinion with reference to notes to the accounts
C. qualified opinion
D. disclaimer of opinion

123. Which of the following is true about explanatory notes?
A. These are given by the directors of the company
B. These are given to adhere to requirements of section 211.
C. These are given by auditors of the company in auditor’s report
D. All of the above

124. The client changed method of depreciation from straight line to written down value method. This has been disclosed as a note to the financial statements. It has an immaterial effect on the current financial statements. It is expected, however, that the change will have a significant effect on future periods. Which of the following option should the auditor express?
A. Unqualified opinion
B. Qualified opinion
C. Disclaimer of opinion
D. Adverse opinion

125. Which of the following documents is not relevant for vouching cash sales?
A. Daily cash sales summary
B. Salesmen’s summary
C. Monthly statements sent to customers
D. Bank statement

126. To test whether sales have been recorded, the auditor should draw a sample from a file of__________?
A. purchase orders
B. sales orders
C. sales invoices
D. bill of loading

127. If the book value of an asset stands at________per cent of the original cost, a company need not provide depreciation on it.
A. two
B. fifteen
C. five
D. ten

128. Which of the following expenses should not be treated as capital expenditure?
A. Expenses paid on installation of a plant.
B. Cost of dismantling a building in case a new building is to be constructed on the land
C. Legal expenses incurred to defend a suit related to title of patent.
D. The fees paid to engineer who constructed the plant.

129. Who is responsible for the appointment of statutory auditor of a limited company ?
A. Directors of the company
B. Members of the company
C. The Central Government
D. All of the above

130. The board of directors shall appoint first auditor of a company
A. With in one month of completion of capital subscription state of the company
B. With in one month of the promotion of the company
C. With in one month of the commencement of the business of the company
D. With in one month of incorporation of the company