Home/FBR/Basic Concepts of Auditing and Accounting Test Online

Basic Concepts of Auditing and Accounting Test Online

Mustansar KhanLast Updated: July 8, 2025

Basic Concepts of Auditing and Accounting Test Online

Basic Concepts of Auditing and Accounting Test

Total Questions:	41
Time Allowed:	20 Minutes
Total Marks:	41
How to Attempt Test:	Please choose the right Option in MCQ-type question.
Test Helpful For:	FBR Sub Inspector Test Customs Inspector Test FBR Interviews FBR Sepoy Test Preparation for Customs and Tax Related Questions

Please wait...

Page 1 of 2

1. Which of the following is the primary purpose of financial accounting?

To record transactions for tax purposes

To create reports for external stakeholders like investors and creditors

To calculate tax liabilities

To prepare financial statements for internal management

2. Which of the following is NOT an accounting concept?

Going Concern

Economic Order Quantity

Matching Principle

Revenue Recognition

3. Which of the following is an example of an external user of financial information?

Investor

Employee

Internal auditor

Business owner

4. Which of the following is included in the statement of cash flows?

Operating, investing, and financing activities

Salaries paid to employees

Long-term liabilities

Revenue from sales of goods

5. Which of the following accounts is typically classified as a current liability?

Long-term loan

Retained earnings

Equity capital

Accounts payable

6. Which of the following is a characteristic of an internal auditor’s role?

To report directly to shareholders

To express an opinion on the fairness of financial statements

To evaluate the effectiveness of internal controls and risk management

To prepare tax returns for the company

7. What does the term 'audit' refer to in accounting?

The examination and verification of financial statements

The process of tax filing

The preparation of a company’s annual report

The process of recording financial transactions

8. Which of the following is a key responsibility of an external auditor?

Preparing tax returns for the company

Managing a company’s internal controls

Verifying the accuracy of financial statements presented to external stakeholders

Approving financial transactions

9. Which of the following is NOT part of an auditor's role in an audit?

Verifying the accuracy of financial records

Examining the effectiveness of internal controls

Conducting a physical count of assets

Preparing financial statements for a company

10. Which of the following is NOT a type of audit opinion?

Tax Opinion

Unqualified Opinion

Disclaimer of Opinion

Qualified Opinion

11. What is the term for the allocation of the cost of a fixed asset over its useful life in accounting?

Depreciation

Amortization

Capitalization

Revenue recognition

12. Which of the following financial statements provides information on a company’s financial position at a specific point in time?

Statement of Cash Flows

Statement of Retained Earnings

Income Statement

Balance Sheet

13. Which of the following is included in the auditor’s responsibility during an audit?

Offering tax advice

Expressing an opinion on the financial statements

Preparing financial statements

Setting up accounting systems

14. What is the primary objective of internal auditing?

To prepare financial statements for external use

To provide assurance on the effectiveness of internal controls

To review the company's profit margins

To verify the company's compliance with tax laws

15. Which of the following accounting principles is used to recognize revenue when earned rather than when received?

Matching Principle

Historical Cost Principle

Revenue Recognition Principle

Conservatism Principle

16. What is the purpose of the matching principle in accounting?

To match the cost of an asset with its selling price

To match assets with liabilities

To match expenses with the revenue they generate in the same period

To match revenue with the period in which it is earned

17. What is the purpose of the 'matching principle' in accounting?

To match the company's earnings with its market share

To match the financial year with tax periods

To ensure that all assets are matched with liabilities

To match expenses with the revenues they help generate

18. Which of the following is the primary purpose of accounting?

To calculate the company’s profits

To create financial reports for shareholders

To provide financial information to stakeholders

To ensure compliance with tax laws

19. What does 'capital budgeting' refer to in accounting and auditing?

The process of planning and managing a company's long-term investments

The setting of tax rates for businesses

The process of auditing the company’s balance sheet

The allocation of a company’s operational budget

20. Which of the following is an example of a non-operating expense?

Loss from the sale of an asset

Rent for office space

Advertising expense

Cost of goods sold

21. What is the role of 'depreciation' in accounting?

To reduce the tax burden on businesses

To increase the net income of a business

To calculate the total liabilities of a business

To record changes in asset value over time due to wear and tear

22. What does the term 'materiality' refer to in accounting and auditing?

The number of accounts in a company’s general ledger

The magnitude of an error or omission that could influence a user’s decision

The rate of return on investment

The size of an audit firm

23. What is the 'conservatism principle' in accounting?

Expenses should be minimized

Assets should be recorded at the highest possible value

Revenues should only be recognized when they are certain

Losses should be anticipated, but gains should only be recognized when they are realized

24. Which of the following is considered a current liability in accounting?

Long-term debt

Equity capital

Short-term loans

Retained earnings

25. What does the term "revenue recognition" mean in accounting?

Recognizing revenue when it is reported in the income statement

Recognizing revenue only when the customer pays for goods or services

Recognizing revenue when goods or services are provided, regardless of when payment is made

Recognizing revenue based on the value of assets

Page 2 of 2

26. Which of the following would be classified as an operating expense in accounting?

Interest paid on loans

Depreciation on machinery

Rent paid for office space

Cost of inventory sold

27. What does the term “bookkeeping” refer to?

The systematic recording of financial transactions

The analysis of financial data

The process of preparing financial statements

The collection of taxes from consumers

28. Which of the following is a primary objective of accounting principles?

To avoid financial audits

To maximize company profits

To standardize financial reporting and ensure comparability

To ensure accuracy in tax calculations

29. Which of the following is NOT included in 'current assets' on a balance sheet?

Inventory

Accounts Receivable

Cash

Equipment

30. What does the 'going concern' principle in accounting assume?

That a company will be liquidated soon

That a company will continue its operations for the foreseeable future

That a company will reduce its liabilities

That a company is not profitable

31. What is the purpose of an audit trail in accounting?

To summarize financial statements

To record the financial performance of a company

To provide a transparent and traceable record of all financial transactions

To track the number of transactions during a given period

32. What does the "cost of goods sold" represent in the income statement?

The costs associated with producing or purchasing the goods sold by a business

The taxes paid on sales

The total revenue earned from sales

The net income earned after all expenses

33. Which of the following financial statements is used to assess a company’s profitability?

Balance Sheet

Statement of Retained Earnings

Income Statement

Cash Flow Statement

34. Which of the following is an example of an intangible asset?

Cash

Inventory

Building

Patent

35. Which of the following is NOT a financial statement used in accounting?

Balance Sheet

Audit Report

Income Statement

Cash Flow Statement

36. What is the 'cost principle' in accounting?

Liabilities should be recorded at market value

Assets should be recorded at their current market value

Revenues should be recorded when earned, not when received

Assets should be recorded at their original cost at the time of purchase

37. What is the 'audit trail' in accounting?

The path of financial transactions through the accounting system, from inception to final report

A document showing all deductions made from gross income

A report showing the daily transactions of a business

A record of all adjustments made to a company’s financial statements

38. What is the 'double-entry bookkeeping' system?

A system where each transaction affects at least two accounts, with equal debits and credits

A method of recording only cash transactions

A system that requires every transaction to be entered twice

A system where each transaction is recorded in two separate journals

39. What is the "trial balance" used for in accounting?

To prepare the financial statements

To verify that total debits equal total credits in the ledger accounts

To determine tax liabilities

To calculate the profit or loss for the period

40. Which of the following is classified as a "liability" on a balance sheet?

Equipment

Capital stock

Notes payable

Accounts receivable

41. What is the term for the analysis of financial transactions to identify errors or discrepancies in an audit?

Analytical Review

Trial Balance

Financial Ratio Analysis

Materiality Test

You Can Learn and Gain more Knowledge through our Online Quiz and Testing system Just Search your desired Preparation subject at Gotest.

Basic Concepts of Taxation Test Online
Federal Board of Revenue (FBR) Function and Role Test Online
Pakistan Customs Role, Functions and Laws Test Online
Sales Tax and Federal Excise Duty Basic Concept Test Online
Key Economic Terms Test Online (Basic Economic Indicators)
Fiscal Policy of Pakistan Test Online
Tax Administration and Reforms in Pakistan Test Online
Sales Tax Act 1990 Pakistan Test Online
Federal Excise Act 2005 Pakistan Test Online
Income Tax Ordinance 2001 Pakistan Test Online

Mustansar KhanLast Updated: July 8, 2025

Facebook Twitter Reddit WhatsApp Share via Email Print

Basic Concepts of Auditing and Accounting Test Online

Basic Concepts of Auditing and Accounting Test Online

Basic Concepts of Auditing and Accounting Test

You Might Also Like

Mustansar Khan

Leave a Reply Cancel reply

Basic Concepts of Auditing and Accounting Test Online

Basic Concepts of Auditing and Accounting Test

You Might Also Like

Mustansar Khan

Your Related

Tax Administration and Reforms in Pakistan Test Online

Income Tax Ordinance 2001 Pakistan Test Online

Basic Concepts of Taxation Test Online

Key Economic Terms Test Online (Basic Economic Indicators)

Federal Excise Act 2005 Pakistan Test Online

Sales Tax and Federal Excise Duty Basic Concept Test Online

Leave a Reply Cancel reply