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 dual aspect concept states that every transaction affects: Only one account Two or more accounts Only income accounts None of the above None 2. Which of the following is not a Fundamental Accounting Assumption? Going Concern Consistency Accrual Materiality None 3. Which of the following is not a type of accounting convention? Conservatism Materiality Business Entity Full Disclosure None 4. Which accounting principle states that expenses should be recognized in the period they are incurred to generate revenue? Conservatism Matching Principle Cost Principle Realization Principle None 5. Which of the following is an example of a real account? Capital Account Sales Account Rent Account Wages Account None 6. Which of the following is not a book of prime entry? Cash Book Sales Journal General Ledger Purchase Journal None 7. What is the normal balance of an expense account? Debit Credit Either Debit or Credit None of the above None 8. Which method of depreciation results in equal depreciation expense each year? Straight-Line Method Written Down Value Method Sum-of-the-Years’ Digits Method Annuity Method None 9. A trial balance checks the: Accuracy of financial statements Mathematical accuracy of ledger accounts Valuation of inventory Revenue recognition None 10. Depreciation is recorded in the books as a/an: Liability Asset Expense Revenue None 11. Which of the following is an example of a capital reserve? General Reserve Share Premium Retained Earnings Workmen Compensation Reserve None 12. The balance sheet is prepared to show: Financial position Profit or Loss Changes in equity Cash Flows None 13. Which of the following is not included in the balance sheet? Cash at Bank Sundry Debtors Salaries Paid Loan Payable None 14. Receipts and Payments Account records transactions on a: Accrual basis Cash basis Hybrid basisNone of the above None of the above None 15. What type of account is a Subscription Account in a non-profit organization? Personal Real Nominal None of the above None 16. Which of the following best defines auditing? Preparing financial statements Checking financial accuracy Examining financial records to express an opinion Maintaining books of accounts None 17. Which of the following is not an objective of auditing? Detection of fraud Prevention of errors Recording transactions Checking compliance with accounting principles None 18. The primary duty of an auditor is to: Detect fraud Prevent fraud Express an opinion on financial statements Maintain financial records None 19. Which of the following audits is conducted voluntarily by the management? Statutory Audit Internal Audit Tax Audit Government Audit None 20. In a cost audit, the auditor examines: Financial records Costing records Taxation details Budget estimates None 21. Internal control aims at: Ensuring adherence to policies Detecting fraud Preparing accounts Paying taxes None 22. A voucher is: A book of accounts An external audit document Evidence supporting a transaction A financial statement None 23. Which of the following is a type of audit opinion? Qualified Opinion General Opinion Internal Opinion External Opinion None 24. Standards on Auditing in India are issued by: RBI ICAI SEBI ICSI None 25. An unqualified audit report means: The auditor has detected fraud The financial statements are materially misstated The financial statements present a true and fair view The audit was not completed None 26. In the absence of a partnership agreement, partners share profits and losses: Equally In capital ratio As per mutual agreement Based on seniority None 27. Goodwill is generally recorded in the books when: It is internally generated A new partner is admitted The business makes losses The business is closed None 28. Which of the following statements about a partner's capital account is correct? Drawings increase the capital balance Interest on capital decreases the capital balance Net profit increases the capital balance Salary to partners is debited to their capital account None 29. Which financial statement shows a company's financial position at a specific date? Income Statement Statement of Cash Flows Balance Sheet Profit and Loss Account None 30. The liability of a shareholder in a company is limited to: The amount of dividends declared The amount of profits earned The unpaid amount on shares held The personal assets of the shareholder None 31. Which of the following is an intangible asset? Machinery Patent Stock Cash None 32. Which activity is classified under financing activities in a Cash Flow Statement? Purchase of machinery Dividend received Issue of shares Interest received None 33. Which of the following appears under "Cash Flow from Operating Activities"? Sale of fixed assets Issue of shares Payment of wages Loan repayment None 34. Audit evidence should be: Sufficient and appropriate Based only on internal records Obtained from a single source Provided only by management None 35. Which type of audit evidence is considered the most reliable? Oral evidence Documentary evidence from independent sources Internal management reports Auditor’s assumptions None 36. Working papers prepared by an auditor should be: Destroyed after the audit Kept as confidential documents Shared with all employees Used only for tax purposes None 37. Which of the following is an example of a compensating error? Sales recorded as purchases Errors canceling each other out Omitting transactions from books Recording expenses as income None 38. Which of the following is an example of fraud? Accidental omission of transactions Overstating revenue intentionally Clerical mistakes in recording transactions Unintentional posting to the wrong account None 39. Which section of the Companies Act, 2013, deals with the appointment of auditors? Section 134 Section 139 Section 148 Section 160 None 40. Which of the following best describes a "qualified audit report"? Financial statements are completely inaccurate Financial statements contain material misstatements No issues are found in financial statements The audit was not conducted 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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