S1: Audit is an independent examination of financial statements. S2: Audit is conducted to detect all frauds and errors. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: Audit is an independent examination of financial statements. S2: Audit is conducted to detect all frauds and errors. Which statement(s) is/are correct?
A. S2 only
B. Both S1 and S2
C. S1 only
D. Neither S1 nor S2
Answer: Option C
Solution (By JKSSB Mock Tests)
Audit is an independent examination to express an opinion on the financial statements. While it aims to detect material misstatements, it cannot guarantee the detection of *all* frauds and errors due to inherent limitations like sampling and collusion. S1 is correct, S2 is incorrect.
Explanation:
Section 44ADA provides for presumptive income at 50% of gross receipts for specified professionals with receipts up to ₹50 lakh (now ₹75 lakh in some cases).
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