The 'Test of Controls' is performed when: MCQ with Answer and Explanation

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The 'Test of Controls' is performed when:

A. Internal controls are weak

B. Never performed

C. No controls exist

D. Auditor intends to rely on the entity's internal controls

Answer: Option D

Solution (By JKSSB Mock Tests)

Test of controls evaluates the operating effectiveness of internal controls.

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

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Question #1

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S1: Depreciation is the gradual decrease in the market value of an asset. S2: Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. Which statement(s) is/are correct?

A. Neither S1 nor S2

B. S1 only

C. Both S1 and S2

D. S2 only

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Correct Answer: Option D

Explanation:
Deprecation is not a valuation process but an allocation process of historical cost over the useful life. It does not measure the decrease in market value. S1 is incorrect, S2 is correct.

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

Question #2

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Which body is responsible for making recommendations on GST rates, exemptions, and thresholds?

A. GST Council

B. Finance Commission

C. CBDT

D. NITI Aayog

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Correct Answer: Option A

Explanation:
Formed under Article 279A, the GST Council is chaired by the Union Finance Minister and comprises state finance ministers.

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Question #3

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Which of the following is NOT an advantage of Zero Based Budgeting?

A. Eliminates redundant expenses

B. It is less time-consuming than traditional budgeting

C. Prevents arbitrary budget inflation

D. Fosters efficient resource allocation

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Correct Answer: Option B

Explanation:
ZBB is actually heavily time-consuming because it requires managers to justify every single expenditure from scratch annually.

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