The 'Audit Risk' is composed of: MCQ with Answer and Explanation

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The 'Audit Risk' is composed of:

A. Business risk and financial risk

B. Inherent risk, control risk, detection risk

C. Only inherent risk

D. Only detection risk

Answer: Option B

Solution (By JKSSB Mock Tests)

Audit risk = Inherent risk × Control risk × Detection risk.

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

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Question #1

The 'Audit Evidence' is more reliable if:

A. Internally generated

B. Obtained from management

C. Obtained from independent external sources

D. Oral

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Correct Answer: Option C

Explanation:
External evidence is generally more reliable than internal evidence.

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

Question #2

Under AS 12, government grants related to depreciable assets are generally:

A. Ignored

B. Recognised as income immediately

C. Added to capital

D. Deducted from the cost of the asset or treated as deferred income

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Correct Answer: Option D

Explanation:
AS 12 permits either reducing the cost of asset or treating grant as deferred income.

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

Question #3

The 'Financial Stability and Development Council' (FSDC) is chaired by:

A. RBI Governor

B. SEBI Chairman

C. Union Finance Minister

D. Prime Minister

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Correct Answer: Option C

Explanation:
FSDC is an apex body for financial sector stability, chaired by the Finance Minister.

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

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