Under CARO $2003$ the auditor is required to report on ____________________.

arrears of cumulative preference dividends

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

preferential allotment of shares to related party

No worries! We‘ve got your back. Try BYJU‘S free classes today!

disposal of fixed assets and its effect on going concern

No worries! We‘ve got your back. Try BYJU‘S free classes today!

unsecured loans granted to related party

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is A arrears of cumulative preference dividends
Preference dividends are those which are actually give preference over equity dividend.
Unless otherwise provided, the preference shares come with cumulative preference dividend which is required to be reported under CARO by the Auditor. This is a liability of the auditee towards the preference shareholders which is vital information for the users of the financial statements.

Suggest Corrections

Similar questions

Under which head and how are the following items shown in the Balance Sheet of a company under Schedule III:

(i) Calls-in-Arrears; (ii) Share Application Money Pending Allotment; (iii) Unpaid Dividend; and (iv) Dividend not paid on Cumulative Preference Shares?

Q. Clause 4(vii) of 'Companies Auditors Report Order (CARO), 2003' requires the auditor to comment whether the company has ___________.

PRACTICAL PROBLEMS

(Issue at premium and calls in arrears)

Hindusthan Petroleum Ltd., invited application for 40,000 Equity shares of Rs 100 each payable as under including 20% premium:

On Application	:	Rs 30	On Allotment	:	Rs 40 (including premium)
On First Call	:	Rs 20	On Final Call	:	Rs 30

All the shares were applied for and also allotted. One share holder who was allotted 500 shares failed to pay first and final call.

Record the above transactions in the journal of the company.

Assuming that the Debt-Equity Ratio is 2 : I, state, giving reasons, which of the following transactions would (I) Increase; (ii) Decrease; (ii.) Not alter the Debt-Equity Ratio :

(i) Issue of new shares (Preference/Equity) for Cash.

(ii) Issue of new shares (Preference/Equity) against purchase of fixed asset.

(iii) Buy-back of its own shares by a Company.

(iv) Issue of Debentures for Cash.

(v) Issue of Debentures against purchase of fixed asset.

(vi) Repayment of Long-term Borrowings.

(vii) Conversion of Debentures into Equity Shares/Preference Shares.

(viii) Sale of a fixed asset at par.

(ix) Sale of a fixed asset at profit.

(x) Sale of a fixed asset at loss.

(xi) Purchase of a fixed asset on a credit of 2 months.

(xii) Purchase of a fixed asset on long-term deferred payment basis.

(xiii) Issue of Bonus Shares.

Q. Cumulative Preference Share is one on which __________________.

Join BYJU'S Learning Program

Under CARO 2003 the auditor is required to report on ____________________.

Under CARO $2003$ the auditor is required to report on ____________________.