The 'Engagement Risk' is different from audit risk; it relates to: MCQ with Answer and Explanation

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The 'Engagement Risk' is different from audit risk; it relates to:

A. Risk of material misstatement

B. Inherent risk

C. Risk of loss or injury to the auditor's professional practice from litigation, adverse publicity, etc.

D. Detection risk

Answer: Option C

Solution (By JKSSB Mock Tests)

Engagement risk is a business risk for the auditor.

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

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Question #1

The 'Investment Property' (Ind AS 40) is measured initially at:

A. Cost

B. Fair value

C. Replacement value

D. Net realisable value

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Correct Answer: Option A

Explanation:
Initial measurement is at cost; subsequently either cost model or fair value model.

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

Question #2

Under AS 19 'Leases', a lease is classified as finance lease if:

A. Lessor retains ownership

B. It transfers substantially all risks and rewards incidental to ownership

C. Lease term is less than one year

D. It is an operating lease

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Correct Answer: Option B

Explanation:
Finance lease transfers substantially all risks and rewards of ownership to the lessee.

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

Question #3

Internal audit is conducted by:

A. External auditor

B. Government auditor

C. Statutory auditor

D. Employees of the company

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Correct Answer: Option D

Explanation:
Internal audit is an independent appraisal function within the organization, performed by internal staff or outsourced, but it's internal to the management.

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

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