S1: Internal check is a system of routine checks. S2: Internal check is conducted by external auditors. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: Internal check is a system of routine checks. S2: Internal check is conducted by external auditors. Which statement(s) is/are correct?
A. Neither S1 nor S2
B. S2 only
C. S1 only
D. Both S1 and S2
Answer: Option C
Solution (By JKSSB Mock Tests)
Internal check is a routine system where the work of one employee is automatically checked by another to prevent errors and frauds. It is an internal management function, not conducted by external auditors. S1 is correct, S2 is incorrect.
Explanation:
Recognizing revenue when earned is a principle of accrual accounting. Cash-based accounting only recognizes revenue when cash is actually received.
S1: The Profit and Loss Appropriation Account is prepared by a company. S2: The Profit and Loss Appropriation Account is prepared by a partnership firm. Which statement(s) is/are correct?
Explanation:
A company does not prepare a Profit and Loss Appropriation Account; it transfers profits to reserves and dividends via the Statement of Changes in Equity. Only a partnership firm prepares this account to distribute profits among partners. S1 is incorrect, S2 is correct.
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