Balance sheet audit includes verification of ____________.

Assets

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Liabilities

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Income and expense accounts where appropriate

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All of the above

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Solution

The correct option is D All of the above
Yearly statutory audit is termed as balance sheet audit. Balance Sheet Audit is done with a view to review all the items of Balance Sheet which includes all the assets and liabilities. This includes physical verification and valuation of assets too. If require, Income and expenses account also can be verified.

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Similar questions

Q. Auditing exercise includes:
(i) Checking of accounts
(ii) Verification of accounts
(iii) Examination of accounts

Q. A , B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1 respectively. Their Balance Sheet as at 31st March , 2108 is as follows:


Liabilities		₹	Assets	₹
Capital A/cs:			Land and Building	50,000
A	60,000		Plant and Machinery	40,000
B	60,000		Furniture	30,000
C	40,000	1,60,000	Stock	20,000
Creditors		30,000	Debtors	30,000
Bills Payable		10,000	Bills Receivable	20,000
			Bank	10,000

		2,00,000		2,00,000

D is admitted as a new partner on 1st April, 2018 for an equal share and is to pay ₹ 50,000 as capital .
Following are the adjustments required on D's admission :
(a) Out of the Creditors , a sum of ₹ 10,000 is due to D which will be transferred to his capital Account.
(b) Advertisement Expenses of ₹ 1,200 are to be carried forward to next accounting period as Prepaid Expenses.
(c) Expenses debited in the Profit and Loss Account includes a sum of ₹ 2,000 paid for B's personal expenses.
(d) A Bill of Exchange of ₹ 4,000, which was previously discounted with the banker, was dishonoured on 31st March, 2018 but no entry has been passed for that .
(e) A Provision for Doubtful Debts @ 5% is to be created against Debtors .
(f) Expenses on Revaluation amounted to ₹ 2,100 is paid by A .
Prepare necessary Ledger Accounts and Balance Sheet after D's admission.

State whether the following statement are true or false.

1. Final Accounts are prepared on the basis of Trial Balance.
2. Trading Account is a part of Profit & Loss Account.
3. Profit Loss Account is prepared to find out Gross Profit or Gross Loss.
4. Gross Profit or Gross Loss is transferred to Balance Sheet.
5. An amount of net profit is added to the capital.
6. All indirect expenses are debited to trading account.
7. Balance Sheet is a statement and not an account.
8. Capital account is a personal account.
9. Amount of prepaid expenses appears on assets side.
10. Bank Overdraft is a liability of business concern.

A Statement of Affairs is similar to the :

(a) Balance sheet
(b) Trial balance
(c) Trading Account
(d) Profit & Loss Account

Q. Steps of preparing Final Accounts is -
(a) Trading Account
(b) Profit and Loss Account
(c) Balance Sheet

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