Chapter 4: Verification and Valuation of Fixed Assets — Online MCQ Test
AUDITING · CLASS 12th · Tamil Nadu State Board
Practice Chapter 4: Verification and Valuation of Fixed Assets with a free chapter-wise online MCQ test.
This chapter covers: Diving into asset auditing this chapter details the principles of verification and valuation. It covers asset classifications along with verification procedures for fixed assets in....
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Chapter 4: Verification and Valuation of Fixed Assets — Important Questions & Answers
What is the main purpose of verifying fixed assets in auditing?
- A. To confirm the existence and ownership of assets
- B. To calculate the market price of goods sold
- C. To check only cash balance in the bank
- D. To prepare the profit and loss account
Answer: A. To confirm the existence and ownership of assets
Verification of fixed assets mainly ensures that the assets actually exist and belong to the business. It also checks proper recording and disclosure.
Verification of fixed assets mainly ensures that the assets actually exist and belong to the business. It also checks proper recording and disclosure.
Which of the following is a fixed asset?
- A. Stock-in-trade
- B. Debtors
- C. Land and Building
- D. Cash at bank
Answer: C. Land and Building
Land and building are long-term assets used in business operations. The other options are current assets or working capital items.
Land and building are long-term assets used in business operations. The other options are current assets or working capital items.
An auditor checks the purchase invoice, title deed, and physical existence of a building. This is mainly part of:
- A. Verification of liabilities
- B. Verification of fixed assets
- C. Audit of cash transactions
- D. Audit of stock valuation
Answer: B. Verification of fixed assets
These procedures help the auditor verify existence, ownership, and proper recording of the fixed asset. They are standard steps in fixed asset verification.
These procedures help the auditor verify existence, ownership, and proper recording of the fixed asset. They are standard steps in fixed asset verification.
Which of the following is the best evidence for ownership of immovable property?
- A. Sales invoice
- B. Title deed
- C. Stock register
- D. Salary register
Answer: B. Title deed
A title deed is the strongest evidence of ownership for land and buildings. Sales invoices are more relevant for movable purchased items.
A title deed is the strongest evidence of ownership for land and buildings. Sales invoices are more relevant for movable purchased items.
Which one of the following is NOT normally considered while valuing fixed assets?
- A. Cost of acquisition
- B. Accumulated depreciation
- C. Replacement cost of all inventory items
- D. Impairment or diminution in value
Answer: C. Replacement cost of all inventory items
Replacement cost of inventory items relates to stock valuation, not fixed asset valuation. Fixed assets are valued based on cost, depreciation, and any permanent diminution in value.
Replacement cost of inventory items relates to stock valuation, not fixed asset valuation. Fixed assets are valued based on cost, depreciation, and any permanent diminution in value.