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Audit Mcqs 150
Audit Mcqs 150
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6. This kind of audit is conducted generally between two annual audit ______.
A. Internal Audit
B. Interim audit
C. Final Audit
D. Continuous Audit
ANSWER: B
8. Before the work of audit is commenced, the auditor plans out the whole of audit work is
called _________.
A. Audit Plan
B. Audit Note
C. Audit Control
D. Audit Programme
ANSWER: D
9. A number of checks and controls exercised in a business to ensure its efficient working are
known as ________.
A. Internal Check
B. Interim Check
C. Internal Audit
D. Internal Control
ANSWER: D
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D. Detection of errors
ANSWER: A
15. A kind of audit conducted for a part of the accounting year is called _______.
A. Periodical Audit
B. Partial Audit
C. Cost Audit
D. Interim Audit
ANSWER: A
17. The audit that is made compulsory under statute is called _________.
A. Statutory audit
B. Partial audit
C. Complete Audit
D. Continuous Audit
ANSWER: A
19. Auditing standards differ from auditing procedures in that procedures relate to ________.
A. Measure of performance
B. Audit principles
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C. Acts to be performed
D. Audit judgments
ANSWER: C
22. Which of the following is not true about opinion on financial statements?
A. The auditor should express an opinion on financial statements
B. His opinion is no guarantee to future viability of business
C. He is responsible for detection and prevention of frauds and errors in financial statements
D. He should examine whether recognized accounting principles have been consistently
followed
ANSWER: A
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A. revenue receipt
B. capital receipt
C. capital expenditure
D. revenue expenditure
ANSWER: C
31. When a transaction has not been recorded in the books of account either wholly or partially
such errors are called as _________.
A. errors of commission
B. error of principle
C. compensating error
D. errors of omission
ANSWER: D
32. Verification of the value of assets, liabilities, the balance of reserves, provision and the
amount of profit earned or loss suffered a firm is called _________.
A. continuous audit
B. partial audit
C. interim audit
D. balance sheet audit.
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ANSWER: D
33. A sale of Rs. 50000 to Mr. A was entered as a sale to Mr. B. This is an example of what?
A. Error of omission
B. Error of commission
C. Compensating error
D. Error of principle
ANSWER: B
34. Recording a transaction twice in the books of original entry is an error of __________.
A. principle
B. commission
C. omission
D. duplication
ANSWER: D
35. Errors and frauds already committed can be discovered under the system of ________.
A. internal audit, internal check, internal control
B. external check
C. statutory audit
D. interim audit
ANSWER: A
37. Vouching of the balances of all incomes and expenses account is known as vouching of
______.
A. personal ledger
B. impersonal ledger
C. cash
D. sales
ANSWER: B
39. Goods sent on approval basis have been recorded as credit sales. This is an example of
what?
A. Error of principle
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B. Error of commission
C. Error of omission
D. Error of duplication
ANSWER: A
41. The profits that can be legally distributed to shareholders are called _________.
A. revenue profits
B. capital profits
C. divisible profits
D. divisible profits
ANSWER: D
46. The main object of the audit of the cash book may be ________.
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47. The purpose of the audit of wage payment is to determine that __________.
A. the work is executed completely for which the workers are paid wages
B. the workers are paid the correct amount of wages under proper authorization
C. the workers are working regularly
D. the workers are not overpaid
ANSWER: B
48. One of the audit procedures to check the issue of share capital of the newly formed
company is __________.
A. the memorandum of association and articles of association
B. the share transfer register
C. the issue of debenture
D. certificate of commencement
ANSWER: A
50. A good audit report must at least meet one of the following qualifications __________.
A. it should offer constructive and timely suggestions to the management
B. it should not point out mistakes
C. it should not be based on factual information
D. it should not be based on balance sheet
ANSWER: A
51. The work of one clerk is automatically check by another clerk is called _________.
A. internal control
B. internal check
C. internal audit
D. interim audit
ANSWER: B
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ANSWER: D
65. Cost audit under section 233(b) of the companies act is ___________.
A. voluntary
B. compulsory
C. avoidable
D. advisable
ANSWER: D
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69. When a company engages a Chartered Accountant as its internal auditor, the external
auditor _____________.
A. need not check the areas covered by internal audit
B. should ignore the existence of internal audit
C. should incorporate the internal auditor's report with his own
D. should examine the system and efficiency of internal audit and devise a suitable audit
programme
ANSWER: D
70. Which of the following factors likely to be identified as a fraud factor by the auditor?
A. The company is planning a initial public offer of quality shares to raise additional capital
for expansion
B. Bank reconciliation statement includes deposits-in-transit
C. Plant and machinery is sold at a loss
D. The company has made political contributions
ANSWER: A
71. The most difficult type of misstatement to detect fraud is based on __________.
A. related party purchases
B. related party sales
C. the restatement of sales
D. omission of a sales transaction from being recorded
ANSWER: D
72. The audit engagement letter, generally, should include a reference to each of the following
except ___________.
A. limitations of auditing
B. responsibilities of management with respect to audit work
C. expectation of receiving a written management representation letter
D. a description of the auditor's method of sample selection
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ANSWER: D
73. The least import element in the evaluation of an audit firm's system of quality control would
relate to ___________.
A. assignment of audit assistants
B. assignment of audit assistants
C. consultation with experts
D. confidentiality of clients information
ANSWER: B
77. Which of the following statements is not true about continuous audit?
A. It is conducted at regular interval
B. It may be carried out on daily basis
C. It is needed when the organization has a good internal control system
D. It is expensive
ANSWER: C
78. Of the following, which is the least persuasive type of audit evidence?
A. Bank statements obtained from the client
B. Documents obtained by auditor from third parties directly
C. Documents obtained by auditor from third parties directly
D. Computations made by the auditor
ANSWER: C
79. Which of the following statement is generally, correct about the reliability of audit
evidence?
A. To be reliable, evidence should conclusive rather than persuasive
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81. The working papers which auditor prepares for financial statements audit are _______ .
A. evidence for audit conclusions
B. owned by the client
C. owned by the auditor
D. retained in auditor's office until a change in auditors
ANSWER: C
82. The quantity of audit working papers complied on engagement would most be affected by
_________________.
A. management's integrity
B. auditor's experience and professional judgment
C. auditor's qualification
D. control risk
ANSWER: B
83. The auditor's permanent working paper file should not normally, include ________ .
A. extracts from clients bank statements
B. past year's financial statements
C. attorney's letters
D. debt agreements.
ANSWER: A
84. Who is responsible for the appointment of statutory auditor of a limited company?
A. Directors of the company
B. Members of the company
C. The central government
D. The state government
ANSWER: B
85. The board of directors shall appoint first auditor of a company ___________.
A. within one month of completion of capital subscription state of the company
B. within one month of the promotion of the company
C. within one month of the commencement of the business of the company
D. within one month of incorporation of the company
ANSWER: D
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86. In case the directions fail to appoint first auditors, the shareholders shall appoint them at
_______ by passing a resolution.
A. a general meeting
B. first annual general meeting
C. statutory meeting
D. annual general meeting
ANSWER: A
87. The authority to remove the first auditor before the expiry of term is with ___________.
A. the shareholders in a general meeting
B. the shareholders in the first annual general meeting
C. the board of directors
D. the central government
ANSWER: A
89. Auditor of a _______ company does not have right to visit foreign branches of the company.
A. unlimited liability
B. manufacturing
C. banking
D. non-profit making
ANSWER: B
90. Who among the following is eligible to be appointed as an audit of Government Company?
A. A chartered accountant in practice
B. A chartered accountant whether in practice or not
C. An auditor appointed by the A & AG
D. An unsound mind person
ANSWER: A
92. Which of the following activities would most likely be performed by EDP department?
A. Authorizing transactions
B. Parity checks
C. Distributing output
D. Correction of transaction errors
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ANSWER: C
93. Which of the following documents is not relevant for vouching cash sales?
A. Daily cash summary
B. A salesman's summary
C. Monthly statements sent to customers
D. Bank statement
ANSWER: C
94. To test whether sales have been recorded, the auditor should draw a sample from a file
______.
A. purchase orders
B. sales orders
C. sales invoices
D. bill of lading
ANSWER: C
95. The 'Guidance Note on Revenue' issued by the ICAI does not deal with _________.
A. sales revenue
B. revenue rendering service
C. revenue from sale of fixed assets
D. income from interest, dividend etc
ANSWER: C
96. Which of the following would prevent double payment of the same voucher?
A. The person signing the cheque should cancel the supporting documents
B. Cheques should be signed by at best two persons
C. The data of payment of vouchers of similar nature should be the same or close to each
other
D. Cheques should not be signed by any one person
ANSWER: A
98. While vouching wages, auditor should examine whether there is proper segregation of
duties. Which of the following activities should not be done by same department?
A. Maintaining personnel records and approving changing in wages rates
B. Proposing pay roll summary and disbursement of wages
C. Making salary statements and filing returns
D. Comparing time clock records with the time reports prepared by the supervisor
ANSWER: B
99. In order to vouch, which of the expenses, the auditor will examine Bill of entry?
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A. Custom
B. Excise duties
C. Sales tax
D. Income tax
ANSWER: A
100. In case of sales return, the auditor should examine which documents?
A. Credit notes, advice notes and inward return notes
B. Debit notes, advice notes and inward return notes
C. Purchase invoices, advice notes and inward return notes
D. Credit notes, inspection report and inward return notes
ANSWER: D
102. The auditor is most likely to examine related party transactions very carefully while
vouching __________.
A. credit sales
B. sales returns
C. credit purchases
D. cash purchases
ANSWER: C
103. The creditor's accounts generally, have credit balance. Debit balance may be due to
__________.
A. advance paid against an order
B. goods returned
C. wrong debit to supplier account
D. any of the above
ANSWER: D
104. In case of vouching the auditor is least likely to examine authorization by appropriate
authority in case of _____________.
A. bad debts written off
B. sales return
C. discount allowed to customers as per organizational policy
D. purchase return
ANSWER: C
105. Which of the following is not true with regard to verification of assets?
A. It invoices substantiation of occurrence of transactions
B. Its objective is to establish existence, ownership, possession, valuation and disclosure of
assets.
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107. For granting subsidy to the sick units, the audit required would be ___________.
A. financial audit
B. internal audit
C. management audit
D. statutory audit
ANSWER: A
110. Statutory auditor of a company is the case of a casual vacancy may be appointed by the
___________.
A. board of directors
B. managing director
C. extraordinary general meeting
D. government concerned
ANSWER: A
111. The scope of external audit in the case of a partnership firm is decided by the ________.
A. Companies Act
B. Partnership Act
C. Letter of appointment of the auditor
D. Income Tax Act
ANSWER: C
112. When the auditor examines and tests the clients accounting and other control systems to
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see whether or not they constitute a reliable base for the preparation of accounts, then it is
known as ______________.
A. Balance sheet audit
B. System audit
C. Continuous audit
D. Internal audit
ANSWER: D
114. Which one of the following statements regarding the internal check system is correct?
A. Have an accurate record of all the business transactions.
B. Know the accounting method followed in the business
C. Plan for future audit works
D. Ascertain the profit earning capacity of the business
ANSWER: B
115. By observing, testing and assessing, an auditor examines the system of ___________.
A. internal audit
B. internal control
C. continuous audit
D. statutory audit
ANSWER: B
118. Which one of the following is true of the position of an auditor regarding the system of
internal check in the organisation?
A. He should acquaint himself with the system of internal check
B. He should monitor and supervise the system of internal check
C. He himself should lay down the system of internal check
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119. Working papers which contain a record of the audit work are the property of _________.
A. Company
B. Government of India
C. Registrar of companies
D. Auditor
ANSWER: D
121. The Audit report along with annual accounts is given by _________.
A. statutory auditor
B. internal auditor
C. government auditor
D. secretarial auditor
ANSWER: A
125. The auditor shall inform the Registrar of Companies in writing about his acceptance of
appointment within ______ days.
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A. 20
B. 45
C. 40
D. 30
ANSWER: D
131. The existence of a good system of internal check reduces to a great extent ________.
A. the work of the auditor
B. the liability of the auditor
C. neither work nor liability of the auditor
D. both work and liability of an auditor
ANSWER: A
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134. The main object of audit of account of a joint stock company is __________.
A. detection and prevention of frauds
B. detection and prevention of errors
C. detection and prevention of errors and frauds
D. d. To find whether the financial statements are drawn up according to the companies Act
ANSWER: D
137. Accountancy work is done throughout the accounting period although auditing work is
done ____________.
A. after the end of accounting period
B. in the middle of accounting period
C. from the second month of accounting period
D. after the end of one month
ANSWER: A
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ANSWER: B
139. __________ is a technical term which refers to the inspection of documentary evidence
supporting and substantiating a transaction.
A. Checking
B. Vouching
C. Valuation
D. Routine checking
ANSWER: A
140. An auditor submits a _________ report during the audit period on some specific matters.
A. opinion
B. qualified
C. find
D. interim
ANSWER: D
141. An auditor submits a _______ report when the whole of the audit process is completed for
a particular audit period of the business concern.
A. final
B. interim
C. first
D. second
ANSWER: D
142. _________ audit is that branch of auditing in which the process of audit is used to evaluate
the social objectives of a company.
A. Management
B. Cost
C. Income tax
D. Interim
ANSWER: A
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145. An auditor can be held liable under CA act 1949 for _________.
A. breach of control
B. negligence
C. criminal officer
D. professional misconduct
ANSWER: A
149. An arrangement in which the accounting work of each individual is checked by other
members is known as ________.
A. internal audit
B. external audit
C. test checking
D. internal check
ANSWER: D
Staff Name
Venkatesh R.
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