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. Which of the following is an example of a capital receipt? Sale of goods Loan taken from a bank Rent received Discount received None 2. Which financial statement reflects a company’s profitability over a period of time? Balance Sheet Cash Flow Statement Profit and Loss Account Trial Balance None 3. Which accounting concept states that revenue and expenses should be recorded in the period they occur, not when cash is received or paid? Consistency Concept Accrual Concept Business Entity Concept Money Measurement Concept None 4. What is the accounting treatment for prepaid expenses? Shown as an expense in the Profit and Loss Account Recorded as an asset in the Balance Sheet Deducted from capital Recorded as income in the Profit and Loss Account None 5. Which of the following errors will NOT affect the trial balance? Errors of omission Errors of principle Errors of commission Errors in totaling None 6. Which of the following accounts always shows a debit balance? Revenue Account Capital Account Expense Account Liability Account None 7. What type of liability is outstanding salary? Current Liability Fixed Liability Contingent Liability Non-current Liability None 8. Which document is prepared to record credit purchases? Sales Invoice Purchase Invoice Credit Note Debit Note None 9. Which of the following transactions will increase the owner’s capital? Withdrawal of cash Additional capital introduced Payment of expenses Purchase of goods on credit None 10. The double-entry system was introduced by: Adam Smith Luca Pacioli Henry Fayol Warren Buffet None 11. Bank reconciliation statement is prepared to reconcile the differences between: Cash book and bank passbook Journal and ledger Trial balance and ledger Cash book and petty cash book None 12. Which of the following is not an example of an intangible asset? Patent Trademark Goodwill Inventory None 13. Which of the following errors is disclosed by the trial balance? Errors of principle Errors of omission Errors of commission Compensating errors None 14. When goods are returned by a customer, which document is issued? Credit Note Debit Note Purchase Invoice Sales Invoice None 15. Which accounting concept assumes that a business will continue indefinitely? Consistency Concept Money Measurement Concept Going Concern Concept Accrual Concept None 16. Which type of audit is mandatory by law? Internal Audit Statutory Audit Performance Audit Social Audit None 17. What is the primary objective of an auditor? To detect fraud and errors To check whether the financial statements give a true and fair view To verify cash transactions To ensure tax compliance None 18. An audit report is addressed to: The government The shareholders The company secretary The creditors None 19. What is the term used for examining a company’s financial statements for accuracy? Investigation Verification Auditing Accounting None 20. Which of the following is an example of an external audit? Statutory Audit Internal Audit Management Audit Performance Audit None 21. The auditor must ensure that financial statements are prepared as per: Management’s requirements Auditing Standards Tax regulations Budget estimates None 22. Which type of audit is performed by an organization’s own employees? External Audit Statutory Audit Internal Audit Tax Audit None 23. What is the meaning of "Independence of an Auditor"? Auditor should not take sides Auditor must be an employee of the company Auditor should follow management’s instructions Auditor should avoid making reports None 24. An audit working paper is used for: Recording financial transactions Documenting audit procedures and findings Preparing financial statements Filing tax returns None 25. Which of the following audits is conducted to check operational efficiency? Financial Audit Statutory Audit Performance Audit Cost Audit None 26. Which of the following is NOT an advantage of auditing? Detection of fraud Detection of errors Prevention of fraud Preparation of financial statements None 27. An adverse audit opinion means that: Financial statements are free from material misstatement Financial statements do not give a true and fair view Auditor is unable to express an opinion Audit is not completed None 28. Which of the following is NOT a type of audit evidence? Documentary Evidence Oral Evidence Physical Evidence Hearsay Evidence None 29. Who issues auditing standards in India? SEBI ICAI RBI MCA None 30. Which of the following is classified as a fictitious asset? Land and Building Prepaid Expenses Goodwill Discount on Issue of Shares None 31. The primary duty of an auditor is to: Detect fraud Verify financial statements Maintain accounts Prepare financial reports None 32. Which financial statement helps in assessing the liquidity position of a company? Profit and Loss Account Balance Sheet Cash Flow Statement Trial Balance None 33. Which of the following accounts is NOT closed at the end of the financial year? Sales Account Rent Account Capital Account Interest Account None 34. Which type of depreciation method assumes that an asset loses value more in the earlier years? Straight Line Method Reducing Balance Method Revaluation Method Sum-of-Digits Method None 35. Which of the following is an example of contingent liability? Outstanding salary Bills payable Bank loan Pending legal case None 36. Which of the following is NOT a limitation of auditing? Dependence on evidence Possibility of fraud remaining undetected Checking of all transactions in detail Subjectivity in judgment None 37. The final responsibility for financial statements lies with: Auditor Management Shareholders Government None 38. Which audit procedure involves comparing current financial data with previous periods? Physical Verification Analytical Review Vouching Confirmation None 39. An auditor’s report that states "true and fair view" without any reservations is called a: Qualified Report Adverse Report Clean Report Disclaimer of Opinion None 40. In case of fraud detection, an auditor should first: Inform the government Report to the shareholders Inform the management Conduct further investigation 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. 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