The 'Professional Skepticism' means: MCQ with Answer and Explanation

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The 'Professional Skepticism' means:

A. Questioning mind and critical assessment of audit evidence

B. Believing management without question

C. Ignoring evidence

D. Being cynical always

Answer: Option A

Solution (By JKSSB Mock Tests)

Auditor must apply professional skepticism throughout the engagement.

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

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Question #1

The main difference between cash basis and accrual basis is:

A. Recording of transactions

B. Trial balance preparation

C. Timing of recognition of revenues and expenses

D. Use of vouchers

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Correct Answer: Option C

Explanation:
Cash basis recognises on cash flow; accrual on earning/incurring.

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Question #2

The 'Charged Expenditure' on the Consolidated Fund includes:

A. Salary of President and CAG

B. Education expenditure

C. Road construction

D. Defense expenditure

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Correct Answer: Option A

Explanation:
Charged expenditure includes emoluments of President, Judges, CAG, etc., which are non-votable.

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Question #3

A: The Trial Balance is a statement, not an account. R: It is prepared to check the arithmetical accuracy of the ledger. Choose the correct option.

A. Both A and R are true and R is the correct explanation of A

B. Both A and R are true but R is NOT the correct explanation of A

C. A is false but R is true

D. A is true but R is false

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Correct Answer: Option B

Explanation:
The Trial Balance is indeed a statement of ledger balances, and its primary purpose is to check arithmetical accuracy. However, the fact that it is a statement does not explain why it checks accuracy; the double-entry system does.

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