UGC NET PAPER2 ACCOUNTING AND AUDITING
1. Accounting is the process of:
Recording financial transactions
Analyzing and interpreting financial statements
Communicating financial information
All of the above
Correct Answer
Wrong Answer
2. Depreciation can be calculated by:
Straight Line Method (SLM)
Straight Line Method (SLM)
Both A and B
None of the above
Correct Answer
Wrong Answer
3. Which accounting principle assumes the business will continue indefinitely?
Matching Principle
Consistency Principle
Going Concern Principle
Prudence Principle
Correct Answer
Wrong Answer
4. Revenue recognition principle states that revenue should be recognized:
When cash is paid
When cash is received
When earned, irrespective of cash receipt
At the end of accounting year only
Correct Answer
Wrong Answer
5. Trial Balance is prepared to check:
Accuracy of financial statements
Arithmetical accuracy of ledger postings
Profit of the firm
Both B and C
Correct Answer
Wrong Answer
6. The IFRS is issued by:
ICAI
IASB
RBI
SEC
Correct Answer
Wrong Answer
7. Revenue recognition principle states that revenue should be recognized:
When cash is received
When cash is paid
When earned, irrespective of cash receipt
At the end of accounting year only
Correct Answer
Wrong Answer
8. Auditing is primarily concerned with:
Detecting errors and frauds
Recording financial transactions
Communication of financial information
Preparation of accounts
Correct Answer
Wrong Answer
9. Statutory audit is:
Mandatory by law
Voluntary
internal audit
Operational audit
Correct Answer
Wrong Answer
10. Who appoints the statutory auditor of a company?
Board of Directors
Shareholders
Government
CEO
Correct Answer
Wrong Answer
11. Which of the following is not an audit evidence?
Physical verification
Observation
Inquiry
Manager’s unsupported statement
Correct Answer
Wrong Answer
12. . Audit risk is:
Risk that auditor loses his job
Risk of financial loss to company
Risk that auditor expresses an inappropriate opinion
Risk of company bankruptcy
Correct Answer
Wrong Answer
13. Vouching in auditing refers to:
Checking the arithmetical accuracy
Examining documentary evidence to support transactions
Preparation of financial statements
Evaluating internal controls
Correct Answer
Wrong Answer
14. A qualified audit report is issued when:
Accounts are perfect
Auditor disagrees with accounting policies
Auditor is unable to verify certain items or disagrees partially
None of the above
Correct Answer
Wrong Answer
15. Continuous audit is mainly conducted by:
External auditors
Tax auditors
Internal auditors
Government Auditors
Correct Answer
Wrong Answer
16. In accounting, goodwill is classified as:
Tangible fixed asset
Fictitious asset
Intangible fixed asset
Current asset
Correct Answer
Wrong Answer
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