An 'Adverse Opinion' is issued when: MCQ with Answer and Explanation

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An 'Adverse Opinion' is issued when:

A. There is a limitation of scope

B. Financial statements are true and fair

C. Auditor is unable to obtain evidence

D. Misstatements are pervasive and material, and financial statements do not present a true and fair view

Answer: Option D

Solution (By JKSSB Mock Tests)

Adverse opinion indicates that financial statements are materially misstated.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

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Securities Premium Account is shown on the liabilities side of the Balance Sheet under the heading:

A. Share Capital

B. Long-term Provisions

C. Reserves and Surplus

D. Current Liabilities

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Correct Answer: Option C

Explanation:
Securities premium is a capital profit and is classified under 'Reserves and Surplus' in the balance sheet.

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Question #2

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In the context of PFMS, the 'Public Accounts Committee' (PAC) examines:

A. The appropriation accounts and the audit reports of the CAG

B. The tax collection policies

C. The annual budget estimates

D. The monetary policy of the RBI

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Correct Answer: Option A

Explanation:
The Public Accounts Committee (PAC) of the Parliament examines the appropriation accounts (showing how grants were spent) and the audit reports submitted by the Comptroller and Auditor General (CAG).

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Question #3

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In the Balance Sheet, assets are typically arranged in the order of:

A. Date of purchase

B. Profitability or Loss

C. Alphabetical order

D. Liquidity or Permanence

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Correct Answer: Option D

Explanation:
Marshalling of balance sheet assets is done either in the order of liquidity (most liquid first) or permanence (most fixed first).

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