The 'Fraud' in an audit context refers to: MCQ with Answer and Explanation

Question

The 'Fraud' in an audit context refers to:

A. Any error

B. Negligence

C. Intentional act by one or more individuals among management, those charged with governance, employees, or third parties involving deception to obtain an unjust or illegal advantage

D. Unintentional misstatement

Answer: Option C

Solution (By JKSSB Mock Tests)

Fraud is intentional; error is unintentional.

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

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Question #1

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Under single entry system, opening capital is ascertained by preparing:

A. Trading account

B. Profit and loss account

C. Income and expenditure account

D. Statement of affairs

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Correct Answer: Option D

Explanation:
In single entry, a statement of affairs (similar to balance sheet) is prepared to ascertain opening and closing capital.

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Question #2

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The 'Comptroller and Auditor General' (CAG) is not responsible for audit of:

A. Government companies

B. Public sector banks (statutory audit by CA firms)

C. Government departments

D. Autonomous bodies substantially financed by government

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Correct Answer: Option B

Explanation:
Statutory audit of public sector banks is conducted by chartered accountant firms appointed by RBI/Central Government; CAG conducts supplementary audit.

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

Question #3

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A liability arising from a past event, whose existence depends on a future uncertain event, is known as:

A. Fixed Liability

B. Deferred Liability

C. Current Liability

D. Contingent Liability

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Correct Answer: Option D

Explanation:
Contingent liabilities depend on the outcome of a future event (like a pending lawsuit) and are disclosed in footnotes.

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

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