S1: Vouching is the examination of documentary evidence. S2: Verification is the proof of ownership, existence, and valuation of assets. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: Vouching is the examination of documentary evidence. S2: Verification is the proof of ownership, existence, and valuation of assets. Which statement(s) is/are correct?
A. Both S1 and S2
B. S1 only
C. S2 only
D. Neither S1 nor S2
Answer: Option A
Solution (By JKSSB Mock Tests)
Vouching involves checking vouchers to verify the authenticity of transactions. Verification goes beyond vouching to confirm the physical existence, legal ownership, and proper valuation of assets and liabilities at the balance sheet date. Both are correct.
A: A current ratio of 2:1 is generally considered ideal. R: It indicates that current assets are twice the current liabilities, ensuring good short-term liquidity. Choose the correct option.
A.A is false but R is true
B.Both A and R are true and R is the correct explanation of A
C.Both A and R are true but R is NOT the correct explanation of A
Explanation:
A current ratio of 2:1 is a standard benchmark for short-term solvency. It means the firm has double the current assets to cover its current liabilities, providing a safety margin. R correctly explains A.
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