What is the primary scope of a 'Tax Audit' under Section 44AB of the Income Tax Act? MCQ with Answer and Explanation

Question
What is the primary scope of a 'Tax Audit' under Section 44AB of the Income Tax Act?
A. To assess social impact
B. To find accounting errors
C. To ensure books are maintained per tax laws and compute taxable income correctly
D. To value the shares of the company
Answer: Option C
Solution (By JKSSB Mock Tests)
A tax audit ensures compliance with the Income Tax Act, preventing tax evasion by verifying deductions and income reporting.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Question #1
The 'HSN Code' under GST is used for:
A. Both A and C
B. Identifying the type of goods
C. Identifying the buyer
D. Tax rate determination
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Correct Answer: Option A

Explanation:
HSN (Harmonized System of Nomenclature) code classifies goods for tax rates.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
S1: Bank Reconciliation Statement is prepared by the bank. S2: Bank Reconciliation Statement is prepared on a specific date. Which statement(s) is/are correct?
A. Both S1 and S2
B. S1 only
C. Neither S1 nor S2
D. S2 only
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Correct Answer: Option D

Explanation:
BRS is prepared by the account holder (the customer), not the bank. It is prepared for a specific date to reconcile the balances as per the Cash Book and the Pass Book on that day. S1 is incorrect, S2 is correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
Deductions for investments in PPF, LIC, and ELSS fall under which section of the Income Tax Act?
A. Section 80C
B. Section 80D
C. Section 80G
D. Section 24(b)
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Correct Answer: Option A

Explanation:
Section 80C allows a maximum deduction of Rs 1.5 Lakhs for specified investments and expenditures.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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