The audit report is addressed to: MCQ with Answer and Explanation

Question
The audit report is addressed to:
A. Government
B. Board of directors
C. Shareholders
D. Management
Answer: Option C
Solution (By JKSSB Mock Tests)
The auditor's report is addressed to the members (shareholders) of the company.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Question #1
A firm's assets total ₹10,00,000 and its owner's equity is ₹4,00,000. The firm borrows ₹2,00,000 from a bank. After the borrowing, what is the total liabilities to outsiders?
A. ₹6,00,000
B. ₹8,00,000
C. ₹4,00,000
D. ₹10,00,000
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Correct Answer: Option B

Explanation:
Initially, liabilities = Assets - Equity = 10,00,000 - 4,00,000 = 6,00,000. After borrowing 2,00,000, liabilities become 8,00,000.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
A business has a closing stock of ₹60,000, its NRV is ₹55,000. Stock will be valued at:
A. ₹60,000
B. ₹55,000
C. ₹60,000 or ₹55,000 at option
D. ₹57,500
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Correct Answer: Option B

Explanation:
Prudence requires stock at lower of cost or NRV, so ₹55,000.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
Which of the following is a feature of a company as per Companies Act?
A. No separate legal entity
B. Unlimited liability
C. Cannot own property
D. Perpetual succession
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Correct Answer: Option D

Explanation:
A company has perpetual succession, separate legal entity, limited liability, and can own property.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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