Chapter Exam

Chapter 4: Verification and Valuation of Fixed Assets — Online MCQ Test

Q: Which of the following is a fixed asset?

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.

Q: An auditor checks the purchase invoice, title deed, and physical existence of a building. This is mainly part of:

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.

Q: Which of the following is the best evidence for ownership of immovable property?

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.

Q: Which one of the following is NOT normally considered while valuing fixed assets?

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.

AUDITING · CLASS 12th · Tamil Nadu State Board

Practice Chapter 4: Verification and Valuation of Fixed Assets with a free chapter-wise online MCQ test for Tamil Nadu State Board CLASS 12th AUDITING. 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.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 4: Verification and Valuation of Fixed Assets — Important Questions & Answers (FAQ)

Frequently asked questions from Tamil Nadu State Board CLASS 12th AUDITING — Chapter 4: Verification and Valuation of Fixed Assets, with answers and explanations. These are sample questions; the exam has its own separate question set.

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.

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.

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.

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.

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.

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Chapter 5: Verification and Valuation of Current and Intangible Assets