Auditing - Multiple Choice Questions T.Y.B.Com.

MCQ’s From University Exam Papers

Q. Select the appropriate option and rewrite the following sentences:

April – 2010

(1) Goods purchased but not recorded in the Purchase Register is ________.
(a) To Reduce Profits
(b) An Error of Omission
(c) An Error of Commission
(d) Effect on agreement of Trial Balance

(2) For Interim Dividend Auditors conduct ________.

(a) Internal Audit
(b) Balance Sheet Audit
(c) Interim Audit
(d) Final Audit

(3) Working papers are the property of the ________.

(a) Client
(b) Auditor
(c) Client and Auditor
(d) Equity Share holders

(4) Which of the following documents is not relevant for vouching of sales ________?
(a) Daily Cash Sales summary
(b) Credit Memos
(c) Delivery Challans
(d) Sales Department Attendance Record

(5) For an appointment of Auditor of Government Companies requires ________.

(a) Passing of Resolution by the members at AGM
(b) No objection Certificate from the Government
(c) Appointment made by Controller and Auditor General of India
(d) Membership of the Institute of Auditors of India

(6) Full form of AAS is ________.

(a) Auditing and Auditing Standards
(b) Auditing and Auditing Statements
(c) Auditing Assurance Standards
(d) Auditing and Assurance Standards

October – 2010
(7) The main object of an audit is ________.
(a) To ensure that the final Accounts are prepared
(b) Detection and Prevention of Fraud and Error
(c) Expression of an opinion on True and Fair view of Accounts
(d) To ensure the Future viability of the enterprise

(8) Statutory Audit is an Audit which is ________.

(a) As per Order of the Government
(b) As per the agreement between Auditor and Client
(c) Conducted in accordance with the Provisions of the relevant Act
(d) Conducted by the internal Auditor

(9) An audit programme must be prepared ________.

(a) Before Commencement of an Audit
(b) During the conduct of an Audit.
(c) After completion of an Audit
(d) After submission of an Audit Report

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Auditing - Multiple Choice Questions T.Y.B.Com.
(10) Internal Auditor's appointment is made by ________.
(a) The institute of internal Auditors of India
(b) The members at the Annual General Meeting
(c) The Management
(d) The Statutory Auditor

(11) One of the disqualifications of an auditor of the Company is ________.

(a) The Partnership firm in which all partners and Practicing chartered Accountants.
(b) A Body Corporate
(c) A Chartered Accountant holding the Certificate of Practice
(d) The holder of certificate under the Restricted Auditor's Certificate (Part B State Rules) 1956

(12) Analytical Review is ________.

(a) An Audit Technique
(b) A Compliance Procedure
(c) Audit in depth
(d) Reporting Requirement

April – 2011
(13) Audit of Accounts of a Limited Company is compulsory under the __________.
(a) Partnership Act, 1932
(b) Companies Act, 1956 (2013)
(c) MVAT Act, 2002
(d) Chartered Accountants Act, 1949

(14) Audit in depth means ________.

(a) Detailed examination of all transactions.
(b) Detailed Examination of selected transactions.
(c) Investigation of all transactions.
(d) None of the above

(15) Audit programme should be__________.

(a) Oral
(b) Flexible
(c) Rigid
(d) Oral and Flexible

(16) __________ incorporates both Accounting and Administrative Controls.

(a) Internal Audit
(b) Internal Control
(c) Internal Check
(d) Statutory Audit

(17) Debtors are valued at __________

(a) Book Value
(b) Decided by the Customer
(c) Realisable Value
(d) As per Articles of Association

(18) Removal of an Auditor before expiry of the term required __________.

(a) Resolution by Board of Directors
(b) Approval from the Central Government
(c) Consent of the Auditor
(d) All of the above

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Auditing - Multiple Choice Questions T.Y.B.Com.
October – 2011

(19) The main Objective of Window Dressing is ________.

(a) To Reduce Tax Liability
(b) To mislead investors
(c) To Understate profits
(d) To increase Liability

(20) Auditing Commences after ________.

(a) Investigation is carried out
(b) Accounting work is over
(c) The General Meeting is over
(d) None of the above

(21) __________document is not relevant for vouching cash purchases.

(a) Purchase invoice
(b) Goods inward register
(c) Attendance record of cashier
(d) Purchase order

(22) A retiring Auditor may be __________.

(a) Reappointed by Board of Directors
(b) Reappointed by outgoing Auditor
(c) Reappointed by the Institute of Chartered Accountants of India
(d) Reappointed at Annual General Meeting

(23) Loose Tools are disclosed under__________.

(a) Fixed Assets
(b) Current Assets
(c) Investments
(d) Miscellaneous Expenditure. (Not Written Off)

(24) To select a sample for audit, the auditor should consider __________.
(a) The size of the sample
(b) The volume of transaction
(c) Adequacy on Internal Control System
(d) All of the above

April – 2012
(25) Secret reserves are shown on __________.
(a) Assets side of Balance Sheet
(b) Credit side of Balance Sheet
(c) Liability side of Balance
(d) None of the above

(26) Internal Check is the Special arrangement of__________.

(a) Statutory Audit
(b) Interim Audit
(c) Book Keeping routine
(d) All of the above

(27) Stock of goods on consignment should be valued at __________.

(a) Invoice Price
(b) Cost Price
(c) Cost or realizable value whichever is lower
(d) None the above

(28) __________ is not an error of commission.

(a) Mathematical Error
(b) Compensating Error
(c) Posting Error
(d) None of the above

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Auditing - Multiple Choice Questions T.Y.B.Com.
(29) Telephone charges should be examined on the basis of __________.
(a) Cash Memo
(b) Agreement with telephone department
(c) Telephone Bill
(d) All of the above

(30) __________ may fill casual vacancy which arises due to resignation of an auditor.
(a) Board of Directors
(b) Central Government
(c) Shareholders
(d) Registrar of the company

(31) The Auditor examines Bill of Lading in order to vouch ________.

(a) Sales within the State
(b) Sales outside the Country
(c) Sales outside the State
(d) All of the above

(32) __________ Asset, which is not subject to physical verification

(a) Cash
(b) Debtors
(c) Stock
(d) Furniture

October – 2012
(33) Goods sold but not recorded in sales register is ________.
(a) Error of Commission
(b) Error of Omission
(c) A compensating error
(d) None of the above

(34) Audit plan should be based on knowledge of the __________.

(a) Client’s share capital
(b) Client’s business
(c) Client’s family
(d) Client’s reputation

(35) Confirmation is __________.

(a) A compliance procedure
(b) An audit technique
(c) A principle of audit
(d) None of the above

(36) __________ should be checked by the auditor in verification of Machinery.

(a) Charge / lien
(b) Ownership
(c) The procession
(d) All of the above

(37) Closing stock with the consignee is to be shown as the assets of __________.
(a) Consignee
(b) Customer
(c) Consigner
(d) All of the above

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Auditing - Multiple Choice Questions T.Y.B.Com.
April – 2013

(38) Manipulation of Accounts to show a better position is called as ________.

(a) Secured Reserve
(b) Window Dressing
(c) True and Fair View
(d) None of the above

(39) Audit conclusions and Reporting is ________.

(a) Advantage of Audit
(b) Limitation of Audit
(c) Technique of Audit
(d) Principle of Audit

(40) Closing stock with consignee is to be shown as the asset of ________.

(a) the consignee
(b) the consigner
(c) the agent
(d) consignee and consigner

(41) ________ deals with audit sampling.

(a) SA 530
(b) SA400
(c) SA 610
(d) SA 510

(42) Internal check is meant for ________.

(a) Prevention of Fraud
(b) Increase the Fraud
(c) Detection of Fraud
(d) Helping Audit in Depth

(43) Audit of Joint Stock companies is conducted in order to ________.

(a) Increase the profit
(b) Increase the Goodwill
(c) Meet the Statutory Requirements
(d) Satisfy the Management

(44) The auditor will examine Bill of Entry in order to vouch __________.
(a) Local Purchases
(b) Import Goods
(c) Cash Purchases
(d) Export Goods

(45) Error means a Bonafide / Malafide Mistake.

(46) Revenue stamp is required on voucher when payment exceeds ₹ 500 / ₹ 5,000.
(47) Verification / Computation is done at the end of the year.
(48) Audit working papers are the property of Auditor / Client of the Auditor.

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Auditing - Multiple Choice Questions T.Y.B.Com.
October – 2013

(49) Goods taken away by the proprietor for personal use not recorded anywhere. This is
(a) Error of Omission
(b) Errors of Commission
(c) Errors of Principle
(d) None of the above

(50) Current file and permanent file are together known as ________.
(a) Audit plan
(b) Audit programme
(c) Audit procedure
(d) Audit working papers

(51) _______ method of selecting sample ensures that all items in the population have an equal chance of selection.
(a) Random selection
(b) Systematic selection
(c) Haphazard selection
(d) None of the above

(52) ________ cannot be subjected to physical verification

(a) Debtors
(b) Land
(c) Buildings
(d) Machinery

April – 2014

(53) Which of the following errors will affect the trial balance?
(a) Repairs to machinery wrongly debited to machinery account
(b) Total purchase Journal is short by ₹ 2000/-
(c) Freight paid on purchase of new Machinery debited to freight account
(d) None of the above

(54) Working papers are the property of the _______.

(a) Client
(b) Client and Auditor
(c) Auditor
(d) None of the above

(55) __________ SA which deals with Audit sampling.

(a) 530
(b) 400
(c) 610
(d) None of the above

(56) The Auditor should examine __________ in case of sales return.

(a) Credit notes and delivery challans
(b) Debit notes and cash memos
(c) Purchase invoices and goods received notes
(d) Credit notes and goods received notes

(57) Prior Period expenses are __________.

(a) Expenses of the current year paid in Previous Year
(b) Expenses of the previous year paid in current year
(c) Expenses of the previous year paid in Previous Year
(d) None of the above

(58) The Auditor of Government Company is appointed by __________.

(a) The Shareholders
(b) The Board of Director
(c) The Controller and Auditor-General of India
(d) The Central Government

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Auditing - Multiple Choice Questions T.Y.B.Com.
October – 2014

(59) Secret reserves are shown on __________.

(a) Assets side of Balance Sheet
(b) Credit side of Balance Sheet
(c) Liability side of Balance
(d) None of the above

(60) Auditing commences after __________.

(a) Investigation is carried out
(b) Accounting work is over
(c) The general meeting is over
(d) None of the above

(61) Working papers are the property of

(a) Auditor
(b) Client
(c) Client and auditor
(d) None of the above

(62) The objective of internal control is to __________.

(a) Prevent frauds
(b) Prevent inefficiency
(c) Improve financial
(d) Select right people

April – 2015

(63) The main Objective of Window Dressing is ________.

(a) To Reduce Tax Liability
(b) To mislead investors
(c) To Understate profits
(d) To increase Liability

(64) Audit Programme should be ________.

(a) Oral
(b) Rigid
(c) Flexible
(d) Oral and Flexible

(65) Audit in depth is a synonymous for ________.

(a) Complete Audit
(b) Incomplete Audit
(c) Final Audit
(d) Detailed Audit

(66) To select a sample for Audit, the auditor should consider ________.
(a) the size of the sample
(b) the volume of transaction
(c) adequacy of internal control system
(d) All of the above

(67) Stock is valued at ________.

(a) Cost
(b) Market Value
(c) Cost or Market value whichever is less
(d) Realizable Value

(68) ________ may fill casual vacancy which arises due to resignation of an Auditor.
(a) Board of Directors
(b) Central Government
(c) Shareholders
(d) Registrar of Company

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Auditing - Multiple Choice Questions T.Y.B.Com.
October – 2015

(69) Analytical Review is ________.

(a) An Audit Technique
(b) A compliance procedure
(c) Audit in depth
(d) Reporting Requirement

(70) An Audit Programme must be prepared ________.

(a) Before commencement of an Audit
(b) During the conduct of an Audit
(c) After completion of an Audit
(d) After submission of an Audit Report

(71) The main object of an Audit is ________.

(a) To ensure that the final Accounts are prepared
(b) Detection and Prevention of Fraud and Error
(c) Expression of an opinion on True and Fair view of Accounts
(d) To ensure the Future viability of the enterprise

(72) Debtors are valued at ________.

(a) Book Value
(b) Decided by the customer
(c) Realisable value
(d) As per articles of Association

(73) ________ incorporates both Accounting and Administrative controls.

(a) Internal Audit
(b) Internal Check
(c) Internal Control
(d) Statutory Audit

(74) Audit of Account of a limited company is compulsory under ________.

(a) Partnership Act, 1932
(b) MVAT Act, 2002
(c) Companies Act, 1956
(d) Chartered Accountants Act, 1949

April – 2015 (Sem-VI)

(75) Manipulation of accounts is Management / Employee / Auditor Fraud.

(76) “Window Dressing” means showing Wrong / Correct / True picture.
(77) Secret Reserve means Hidden / Free / Capital reserve.
(78) Error means an unintentional / intentional / expected mistakes in financial statements.
(79) After examination of records the auditor should address his report to the Shareholders / BOD / Govt.
(80) Ownership of Audit Working Papers is with Auditor / Client / Government.
(81) The term “General Purpose Financial Statements” never includes Statement by Chairman / Balance Sheet
/ Statement of Profit and Loss.
(82) Sampling / Test Checking / Internal Control means selecting and examining representative sample from a
large number of similar items.
(83) Auditor expresses his expert opinion through his Audit Report / Audit Note / Audit Working Papers.
(84) Credit Notes / Debit Notes / Promise Notes are issued when goods are returned by customers.

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Auditing - Multiple Choice Questions T.Y.B.Com.
Q. Match the following column and rewrite: 6 Marks

April – 2010

Column A Column B
1) True and Fair View a) Compile the Accounts
2) Internal Check b) To collect Audit evidence
3) Accountant c) Statutory Auditor of a Company
4) Audit Techniques d) Includes Copy of Memorandum of
5) Report to Shareholders Association
6) Permanent File e) Special Resolution
f) Voluntary Audit
g) Disclose all material facts
h) Work of one person is checked by
another person

October – 2010

Column A Column B
1) Manipulation of Accounts a) Verification of Assets & Liabilities
2) Current file b) Management Responsibility
3) Capital Expenditure treated as Revenue c) Year-end Audit
Expenditure d) Window Dressing
4) Internal Control e) Error of Commission
5) Final Audit f) Depreciation Workings
6) Substantive procedures g) Error of Principle
h) Articles of Association

April – 2011

Column A Column B
1) Interim Audit a) Intentional Mistake
2) Voucher b) Object of an Audit
3) Verification of Loan c) Record of Queries
4) Manipulation of Accounts d) Between two Annual Audit
5) Current File e) Principle of Auditing
6) Confidentiality f) Power to Borrow
g) Signed by Authorised Officer
h) Accounting policies
i) Similar to Internal Audit

October – 2011

Column A Column B
1) An Auditor a) Ownership
2) Primary object of an Audit b) Principle of Audit
3) Internal Auditor c) Detailed Schedule of Audit work
4) Verification of Liabilities d) Should be Independent
5) Audit Programme e) Report to Shareholders
6) Work Performed by others f) Detection of frauds
7) Documentation g) Report to Management
h) Confirmation from Parties

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Auditing - Multiple Choice Questions T.Y.B.Com.
April – 2012
Column A Column B
1) Confirmation a)Can be removed without prior
2) Window Dressing approval of Central Government
3) First Auditor b)The work begins after the end of
4) Continuous Audit Accounting Year
5) Cash payment exceeds ₹ 5,000 c)From auditor to management about
6) A person who is partner of an office of the Internal Control
company d)Making less provision for Bad Debts
7) Concurrent Audit e)A Technique of Audit
8) Letter of weakness f)The work begins in the Accounting
Year itself
g) Signature of authorised official on
Revenue Stamp
h) One of the disqualifications for an
appointment of Auditor of the
Company
i) Signature of payee on Revenue Stamp
j) Similar to Internal Audit
October – 2012
Column A Column B
1) Work performed by others a) Record of queries raised during the
2) Current file audit
3) Operational control b) Budgetary Control
4) Stock in trade c) Principle of Audit
5) Audit techniques d) Physical verification is required
e) Method of collecting audit evidence

April – 2013
Column A Column B
1) Current audit file a) issued by ICAI
2) SA b) technique of Auditing
3) Confidentiality c) queries Record
4) computation d) issued by RBI
e) principle of Audit

April – 2014
Column A Column B
1) Internal Auditor a) Statutory Auditor
2) SA dealing with working papers b) Add Cost to the cost of Original shares
3) Report to shareholders c) Shareholders at Annual General
4) Royalty Meetings
5) Re-appointment of Auditor d) SA 300
6) Right shares e) Report to management
f) Lease Deed
g) SA 230

October – 2015
Column A Column B
1) An Auditor a) Ownership
2) Primary object of an Audit b) Principle of Audit
3) Internal Audit c) Detailed schedule of Audit
4) Verification of Liabilities d) Should be independent
5) Audit Programme e) Report to shareholders
6) Work performed by other f) Detection of Frauds
g) Report to management
h) Confirmation from Parties

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Auditing - Multiple Choice Questions T.Y.B.Com.
Q. State whether the following statements are True or False. 6 Marks

April – 2012
(1) Internal Auditor can be appointed by the management. True
(2) While checking dividend received auditor should check dividend warrant. True
(3) Systematic selection method of sampling is also known as interval sampling. True
(4) An Error of Principal will not affect the Trial Balance. True
(5) Audit plan should be primarily based on knowledge of clients business. True
(6) Compliance procedures are the steps taken to obtain the evidence regarding internal control. True
(7) Verification protects against misuse of assets. True
October – 2012
(1) Verification means comparing the entries in the books of accounts with documentary evidence. False
(2) Casting error is a type of two sided error. False
(3) Random selection method of sampling is also known as interval sampling. False
(4) Auditor can also apply Test Checking for opening and closing balances False
(5) Audit note book is a part of permanent audit file. False
April – 2013
(1) A shareholder of the company can be appointed as a statutory auditor of a company. False
(2) Audit Techniques are given by SA 500. False
(3) Balance confirmation from Debtors is an internal document. False
(4) Internal Auditor must be a Chartered Accountant. True
(5) Permanent Audit File includes Trust Deed. True
(6) The Method valuation of assets should not be consistent. False
October – 2013
(1) Wrong casting of subsidiary books does not affect the Trial Balance. False
(2) Audit plans are to be approved by client being audited. False
(3) Auditor need not check the goods received note in case of cash purchases False
(4) Depreciation is to be provided on the investments annually. False
October – 2014
(1) Audit plan should be primarily based on knowledge of clients business. True
(2) Verification protects against misuse of assets. True
(3) Systematic selection method of sampling is also known as interval sampling True
(4) Routine checking save time. True
April – 2015
(1) Primary responsibility of Auditor is to detection of errors and fraud. False
(2) A firm of a chartered Accountant cannot be appointed as a statutory auditor. False
(3) Vouching includes verification. False
(4) SA 530 deals with Audit Sampling. True
(5) An Error of Principal will not affect the Trial Balance. True
(6) Auditor can also apply Test checking for opening and closing balances. False

April – 2015 (Sem-VI)

(1) A voucher need not be dated. False
(2) Audit report is a part of financial statements. False
(3) Fraud through defalcation is an employee fraud. True
(4) Stock taking involves actual verification and counting. True
(5) Financial statements are ordinarily prepared and audited annually. True
(6) Compensating error does not affect the trial balance. True
(7) Audit planning helps the auditor to devote appropriate attention to important areas of the audit. True
(8) There is no risk involved in Audit Sampling. False
(9) Management has no control over internal control. False
(10) Management is primarily responsible for detection and prevention of errors and frauds. True

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