The 'Direction of Testing' for existence of assets is from: MCQ with Answer and Explanation

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The 'Direction of Testing' for existence of assets is from:

A. No testing

B. Both ways

C. Physical asset to accounting records

D. Accounting records to physical asset

Answer: Option D

Solution (By JKSSB Mock Tests)

To verify existence, select from records and verify physically. Completeness is opposite.

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

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Practice More Accountancy and Book Keeping Questions

Question #1

An opening journal entry is passed to:

A. Record the first transaction of the year

B. Close nominal accounts

C. Adjust closing stock

D. Bring forward the balances of assets, liabilities, and capital from the previous year

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Correct Answer: Option D

Explanation:
The opening entry records the closing balances of real and personal accounts from the previous year into the new books.

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

Question #2

If debt-equity ratio is 2:1 and total assets ₹12,00,000, long-term debt is: (Assume no current liabilities)

A. ₹4,00,000

B. ₹2,00,000

C. ₹6,00,000

D. ₹8,00,000

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Correct Answer: Option D

Explanation:
Total assets = Equity + Debt (since no CL). D/E = 2, so D=2E. E + 2E = 12L => 3E=12 => E=4L, D=8L.

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Question #3

The 'Anti-Profiteering Authority' under GST ensures:

A. Tax evasion is prevented

B. Benefits of tax rate reduction are passed to consumers

C. Suppliers charge high prices

D. Companies do not make profit

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Correct Answer: Option B

Explanation:
It ensures that reduction in tax rates or benefit of ITC is passed on as commensurate price reduction.

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

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