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A factory produces 5,000 units. Total fixed cost is ₹50,000 and variable cost per unit is ₹10. What is the total cost per unit?
Anonymous Quiz
16%
₹10
8%
₹15
73%
₹20
3%
₹25
If the selling price per unit is ₹40, variable cost per unit is ₹25, and fixed costs are ₹30,000, what is the breakeven point (in units)?
Anonymous Quiz
9%
1,200 units
11%
1,500 units
77%
2,000 units
3%
3,000 units
In a job costing system, direct material = ₹15,000; direct labour = ₹10,000; factory overheads = 60% of direct labour. What is the total cost of the job?
Anonymous Quiz
86%
₹31,000
6%
₹25,000
6%
₹35,000
2%
₹30,000
A machine costing ₹5,00,000 has a life of 10 years and scrap value of ₹50,000. Find annual depreciation using straight-line method.
Anonymous Quiz
87%
₹45,000
9%
₹50,000
3%
₹40,000
1%
₹55,000
When actual overheads = ₹1,00,000 and absorbed overheads = ₹90,000, then the overhead is:
Anonymous Quiz
15%
Over-absorbed
79%
Under-absorbed
5%
Absorbed correctly
1%
None
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Auditing and Ethics for CA Intermediate
1. Introduction to Auditing
Auditing is an independent examination of financial statements to express an opinion on their fairness and adherence to accounting standards. Auditors provide assurance on the truthfulness of the financial reports of an entity, ensuring stakeholders can make informed decisions.
2. Objectives of Auditing
* Expression of Opinion: The primary objective is to express an opinion on whether the financial statements are free from material misstatements.
* Compliance Check: To verify whether financial statements comply with applicable laws and regulations.
* Fraud Prevention: Detecting fraud, errors, and irregularities in financial statements.
* Reliability of Financial Statements: Ensure the reliability of financial statements for external stakeholders like investors, creditors, and the government.
3. Types of Audit
* Internal Audit: Focuses on evaluating the internal controls, risk management, and compliance with policies.
* External Audit: Performed by independent auditors to give an opinion on the financial statements.
* Statutory Audit: Required by law for certain entities, like public companies.
4. Auditing Standards and Techniques
* Standard on Auditing (SA): These are guidelines issued by the Institute of Chartered Accountants of India (ICAI) that auditors must follow.
* Audit Planning and Risk Assessment: An essential step to assess the risk of material misstatements and to develop the audit approach accordingly.
* Audit Evidence: Auditors collect evidence through various techniques like inspection, observation, inquiry, and confirmation to support their audit opinion.
5. Audit Process
* Planning: Initial understanding of the business and its environment, setting audit objectives, identifying risks.
* Fieldwork: Collection of evidence, testing internal controls, performing substantive procedures.
* Reporting: Finalizing the audit opinion and preparing the audit report.
1. Introduction to Auditing
Auditing is an independent examination of financial statements to express an opinion on their fairness and adherence to accounting standards. Auditors provide assurance on the truthfulness of the financial reports of an entity, ensuring stakeholders can make informed decisions.
2. Objectives of Auditing
* Expression of Opinion: The primary objective is to express an opinion on whether the financial statements are free from material misstatements.
* Compliance Check: To verify whether financial statements comply with applicable laws and regulations.
* Fraud Prevention: Detecting fraud, errors, and irregularities in financial statements.
* Reliability of Financial Statements: Ensure the reliability of financial statements for external stakeholders like investors, creditors, and the government.
3. Types of Audit
* Internal Audit: Focuses on evaluating the internal controls, risk management, and compliance with policies.
* External Audit: Performed by independent auditors to give an opinion on the financial statements.
* Statutory Audit: Required by law for certain entities, like public companies.
4. Auditing Standards and Techniques
* Standard on Auditing (SA): These are guidelines issued by the Institute of Chartered Accountants of India (ICAI) that auditors must follow.
* Audit Planning and Risk Assessment: An essential step to assess the risk of material misstatements and to develop the audit approach accordingly.
* Audit Evidence: Auditors collect evidence through various techniques like inspection, observation, inquiry, and confirmation to support their audit opinion.
5. Audit Process
* Planning: Initial understanding of the business and its environment, setting audit objectives, identifying risks.
* Fieldwork: Collection of evidence, testing internal controls, performing substantive procedures.
* Reporting: Finalizing the audit opinion and preparing the audit report.
Ethics in Auditing
1. Ethical Framework for Auditors
* Integrity: Auditors must be honest, straightforward, and impartial in their professional work.
* Objectivity: Auditors should remain free from bias, conflict of interest, and should make professional judgments without external influence.
* Confidentiality: Auditors are obligated to maintain the confidentiality of client information and not misuse it for personal gain.
* Professional Competence and Due Care: Auditors must maintain a level of professional knowledge and skill that is required for the job and perform duties with due care and diligence.
2. Code of Ethics for CA
* The ICAI Code of Ethics outlines standards of conduct for auditors to ensure public trust in their services.
* Independence: Auditors must remain independent in both appearance and in fact. Any situation where independence could be compromised must be avoided.
3. Auditor’s Responsibilities
* Independence in Appearance: Even the perception of bias or conflict of interest can undermine the audit process.
* Professional Skepticism: Auditors must always maintain a questioning mind and critically assess audit evidence.
* Accountability: The auditor is responsible for providing a fair and objective audit report, even in the face of pressure.
4. Auditor’s Liability
* Auditors have legal responsibility for negligence, errors, and failure to detect fraud in the course of their duties. They can be held liable in cases of misstatement, misrepresentation, or fraud that could have been detected through the audit process.
---
### Key Takeaways
* Auditing helps ensure the reliability of financial statements, giving stakeholders confidence in the company's financial health.
* Ethical principles guide auditors to act with integrity, maintain independence, and avoid conflicts of interest.
* Adherence to auditing standards and ethical guidelines is essential for the credibility and accuracy of the audit process.
Recommended Areas for Study:
* Standard on Auditing (SA) - SA 200, SA 315, SA 530
* Code of Ethics by ICAI
* Auditor’s Responsibilities and Liabilities
* Types of Audit and their Importance
This overview should help in grasping the core concepts and focus areas for Auditing and Ethics in the CA Intermediate exam.
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1. Ethical Framework for Auditors
* Integrity: Auditors must be honest, straightforward, and impartial in their professional work.
* Objectivity: Auditors should remain free from bias, conflict of interest, and should make professional judgments without external influence.
* Confidentiality: Auditors are obligated to maintain the confidentiality of client information and not misuse it for personal gain.
* Professional Competence and Due Care: Auditors must maintain a level of professional knowledge and skill that is required for the job and perform duties with due care and diligence.
2. Code of Ethics for CA
* The ICAI Code of Ethics outlines standards of conduct for auditors to ensure public trust in their services.
* Independence: Auditors must remain independent in both appearance and in fact. Any situation where independence could be compromised must be avoided.
3. Auditor’s Responsibilities
* Independence in Appearance: Even the perception of bias or conflict of interest can undermine the audit process.
* Professional Skepticism: Auditors must always maintain a questioning mind and critically assess audit evidence.
* Accountability: The auditor is responsible for providing a fair and objective audit report, even in the face of pressure.
4. Auditor’s Liability
* Auditors have legal responsibility for negligence, errors, and failure to detect fraud in the course of their duties. They can be held liable in cases of misstatement, misrepresentation, or fraud that could have been detected through the audit process.
---
### Key Takeaways
* Auditing helps ensure the reliability of financial statements, giving stakeholders confidence in the company's financial health.
* Ethical principles guide auditors to act with integrity, maintain independence, and avoid conflicts of interest.
* Adherence to auditing standards and ethical guidelines is essential for the credibility and accuracy of the audit process.
Recommended Areas for Study:
* Standard on Auditing (SA) - SA 200, SA 315, SA 530
* Code of Ethics by ICAI
* Auditor’s Responsibilities and Liabilities
* Types of Audit and their Importance
This overview should help in grasping the core concepts and focus areas for Auditing and Ethics in the CA Intermediate exam.
🔗Join us for daily updates
🔗Join our discussion group
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Definition: A "Small Company" is defined under the Companies Act, 2013, as a private company meeting specific criteria. 🏢
Paid-up Capital: The paid-up share capital should not exceed ₹2 crore. 💰
Turnover Limit: The annual turnover must not exceed ₹20 crore, as per the latest financial statements. 📈
Exemptions: Small companies enjoy several exemptions and simplified compliance requirements compared to larger companies. ✅
Importance: Promotes ease of doing business and encourages entrepreneurship among small-scale enterprises. 🌱
Regulatory Framework: Small companies are governed under less stringent rules, fostering growth and innovation. 🚀
Understanding the definition and implications of a small company is essential for aspiring entrepreneurs and business professionals! 📚✨
🔗Join us for daily updates
Join our discussion group
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