Which of the following is a direct method of collecting audit evidence? MCQ with Answer and Explanation

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Which of the following is a direct method of collecting audit evidence?

A. All of the above

B. Observation

C. Inspection

D. Inquiry

Answer: Option A

Solution (By JKSSB Mock Tests)

Inquiry, observation, and inspection are all direct methods used by auditors to gather sufficient and appropriate audit evidence.

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

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Question #1

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X and Y share profits in ratio 3:2. Z is admitted with 1/5th share. Sacrificing ratio of X and Y is:

A. 2:3

B. 3:2

C. Equal to new ratio

D. 1:1

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Correct Answer: Option B

Explanation:
If new partner's share is given without specifying sacrifice, old partners sacrifice in their old ratio. So 3:2.

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Question #2

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Subscription received in advance for a non-profit organisation is shown in the Balance Sheet as:

A. Expenditure

B. Asset

C. Liability

D. Income

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Correct Answer: Option C

Explanation:
It is a liability because it pertains to the future period.

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Question #3

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The GST Composition Scheme is designed primarily to benefit:

A. Large multinational corporations

B. E-commerce operators

C. Small taxpayers by reducing compliance burden

D. Exporters

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Correct Answer: Option C

Explanation:
It allows small businesses (up to a certain turnover) to pay a fixed percentage of turnover as tax and file simpler, less frequent returns.

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