Day: June 24, 2026

Accounting Multiple Choice Question – 24 June 2026

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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Which ONE of the following describe tests for understatement?

Select ONE answer:

  1. Selecting a sample of despatch notes and tracing these to a matching sales invoice and entry into the sales account
  2. Selecting a sample of sales invoices and tracing these to a matching despatch note
  3. Selecting a sample of items of plant from the asset register and physically verifying their existence
  4. Selecting a sample of items of plant physically verified by the client and tracing these to an entry in the asset register

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

  1. Correct – Tests for understatement (i.e., omission) cannot start from the source being tested for understatement/omission. They must start from some other source and trace through to the accounting records, to prove that nothing has been omitted (i.e., the entity’s transactions or balances are not understated).
  2. Not correct
  3. Not correct
  4. Not correct

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