Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Fundamentals of Accounting and Auditing Total Number of Question: 40 Time: 41 Minutes Please check your email after completion of test for result. All the best... Name Phone No Email State 1. The concept of conservatism states that: All profits should be recorded as soon as they are earned Anticipate no profit but provide for all possible losses Every transaction should have two effects Business and owner are the same entity None 2. Which of the following is an example of a personal account? Cash Account Capital Account Sales Account Machinery Account None 3. Which of the following is NOT a feature of Accounting Standards (AS)? They ensure uniformity in accounting They reduce chances of fraud They are legally mandatory in all cases They help in comparability of financial statements None 4. Which of the following transactions is recorded in the cash book? Depreciation of machinery Credit purchase of goods Cash sales of goods Goods withdrawn for personal use None 5. Which of the following errors affects the agreement of the Trial Balance? Compensating Error Error of Principle Omission of Transaction Posting to the wrong side of the account None 6. The accounting equation is: Assets = Liabilities + Revenue Assets = Liabilities + Equity Assets = Liabilities + Reserves None of the above None 7. A transaction recorded twice in the books of accounts is called: Error of Principle Compensating Error Error of Duplication Error of Omission None 8. A Trial Balance is prepared to: Check the accuracy of financial statements Check the arithmetical accuracy of books Determine net profit or loss Prepare the balance sheet None 9. A credit note is issued when: Goods are sold on credit Goods are returned by the customer Goods are purchased on credit None of the above None 10. Which book of accounts is also known as the "Principal Book"? Journal Ledger Trial Balance Cash Book None 11. Profit & Loss Account is prepared to determine: Total assets Net Profit or Loss Owner’s capital Total expenses None 12. Outstanding expenses are shown in the: Trading Account Profit & Loss Account Balance Sheet (Liability side) Both B & C None 13. Goodwill is classified as: Current Asset Intangible Asset Fixed Asset Current Liability None 14. The term “depreciation” is associated with: Fixed Assets Current Liabilities Revenue Expenditure Current Assets None 15. The main purpose of preparing a Bank Reconciliation Statement (BRS) is to: Check errors in bank transactions Find differences between bank passbook & cash book Record interest earned from the bank Adjust overdraft balance None 16. The scope of an audit is determined by: The auditor’s choice The terms of engagement The taxation laws The finance department None 17. A statutory audit is conducted under: Company Law Income Tax Law Sales Tax Law Banking Regulation Act None 18. Audit planning is done to: Identify key risk areas Detect frauds Check financial statements Avoid errors in bookkeeping None 19. The primary duty of an auditor is to: Detect fraud Verify financial statements Maintain accounts Prepare financial reports None 20. The auditor’s opinion is expressed in: Trial Balance Balance Sheet Audit Report Cash Book None 21. Internal control aims to: Prepare financial statements Detect fraud Safeguard assets & ensure efficiency Prepare audit reports None 22. An audit working paper is: A final report A record of audit evidence A legal document A financial statement None 23. The “true and fair view” concept in auditing means: Financial statements are free from bias Financial statements are completely accurate No errors exist in the books The company is profitable None 24. Which of the following is an example of a capital expenditure? Payment of rent Salary to employees Purchase of machinery Payment for raw materials None 25. The process of recording transactions in the books of accounts is known as: Summarizing Journalizing Posting Classifying None 26. If closing stock is not recorded in the trial balance, its effect in the financial statements will be: Gross profit will be understated Net profit will be overstated Gross profit will be overstated No effect None 27. Which statement is correct regarding depreciation? It is charged only on current assets It is charged to ascertain net profit or loss It is considered as a capital receipt It increases the value of assets None 28. Prepaid expenses appear in the: Trading Account Profit and Loss Account Balance Sheet under Assets Balance Sheet under Liabilities None 29. Which of the following is not a contingent liability? Bills discounted but not yet matured Unclaimed dividends Guarantees given on behalf of others Pending litigation None 30. Vouching in auditing refers to: Examination of cash transactions Checking financial statements Verifying accounts books Comparing records with supporting documents None 31. The main objective of an audit is to: Detect fraud Check financial statements Prevent errors Evaluate employees None 32. An auditor is appointed by: Shareholders Board of Directors Government Company Secretary None 33. Which of the following is not a type of audit? Statutory Audit Social Audit Market Audit Internal Audit None 34. The auditor’s report is addressed to: Management Government Shareholders Employees None 35. In an audit, internal control refers to: Procedures ensuring efficiency in operations Verification of financial statements Controlling internal financial transactions Preventing external audit None 36. The capital of a business is classified as: Liability Asset Expense Revenue None 37. Accrued income appears on the: Profit & Loss Account Trading Account Balance Sheet (Assets side) Balance Sheet (Liabilities side) None 38. A partnership firm must be registered under which Act? Companies Act, 2013 Indian Partnership Act, 1932 Income Tax Act, 1961 Contract Act, 1872 None 39. A suspense account is opened when: There is a trial balance difference The auditor finds errors A fraud is detected A new business starts None 40. Discount allowed to debtors is classified as: Expense Liability Asset Capital None 1 out of 4 Great job on taking the INCOC Test! We appreciate your interest in test. Look out for results and future opportunities. Stay Connected !! Your quiz time is about to finish. Few seconds left. Time's upYou cannot switch tabs while taking this quiz!You are not allowed to switch tabs violation has been recorded.you cannot minimize full screen mode!You are not allowed to minimize full screen while taking this quiz, violation has been recorded.Access denied! 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