Auditing and EthicsQuestion 5664 of 212
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13. Which of the following statements is not correct about Limited Liability Partnership (LLP)? 8 SUGGESTED ANSWER

Options

AAn LLP is required to maintain Statements of costs of goods purchased, inventories, work-in-progress, finished goods and costs of goods sold.
BAn LLP is called small LLP, the Turnover of which, as per the Statement of Accounts and Solvency for the immediately preceding financial year, does not exceed forty lakh rupees (` 40,00,000) or such higher amount, not exceeding fifty crore rupees, as may be prescribed;
CEvery LLP would be required to file annual return in Form 11 with ROC within 30 days of closer of financial year. The annual return will be available for public inspection on payment of prescribed fees to Registrar.
DThe auditor may be appointed by the designated partners of the LLP at any time for the first financial year but before the end of first financial year. (2 Marks)
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Correct Answer

✅ Option C — Every LLP would be required to file annual return in Form 11 with ROC within 30 days of closer of financial year. The annual return will be available for public inspection on payment of prescribed fees to Registrar.

All Options:

  • AAn LLP is required to maintain Statements of costs of goods purchased, inventories, work-in-progress, finished goods and costs of goods sold.
  • BAn LLP is called small LLP, the Turnover of which, as per the Statement of Accounts and Solvency for the immediately preceding financial year, does not exceed forty lakh rupees (` 40,00,000) or such higher amount, not exceeding fifty crore rupees, as may be prescribed;
  • CEvery LLP would be required to file annual return in Form 11 with ROC within 30 days of closer of financial year. The annual return will be available for public inspection on payment of prescribed fees to Registrar. ✓
  • DThe auditor may be appointed by the designated partners of the LLP at any time for the first financial year but before the end of first financial year. (2 Marks)

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Detailed Solution & Explanation

Correct Answer: Option **C**

Explanation:
Let us examine the correctness of each statement regarding LLPs under the Limited Liability Partnership Act, 2008 and LLP Rules, 2008:

- **Option A is correct**: As per Rule 24 of the Limited Liability Partnership Rules, 2008, every LLP is required to maintain books of accounts containing statements of costs of goods purchased, inventories, work-in-progress, finished goods, and costs of goods sold.

- **Option B is technically incomplete/incorrect**: Under Section 2(ta) of the LLP Act (inserted via the LLP Amendment Act, 2021), a small LLP is defined as one whose contribution does not exceed ` 25` Lakhs *and* whose turnover for the preceding year does not exceed ` 40` Lakhs (or such higher limits as may be prescribed). The statement in Option B omits the contribution condition.

- **Option C is incorrect**: Under Section 35(1) of the LLP Act, every LLP is required to file an annual return in Form 11 with the Registrar of Companies (ROC) within **60 days** of the closure of the financial year, not 30 days. Hence, the statement that it must be filed within 30 days is incorrect.

- **Option D is correct**: Designated partners may appoint the auditor(s) of the LLP at any time for the first financial year but before the end of the first financial year.

Since the question asks for the statement that is **not correct**, Option C is incorrect (and Option B is also technically incorrect). In the official answer key, both Options B and C are accepted. Choosing C as the primary incorrect statement due to the clear error in filing duration (30 days instead of 60 days):

Hence, **Option C** is the correct answer.

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