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T.Y. B. Com Auditing (MCQ'S) by Asst. Prof. Pravin Kad (M. Com., SET, NET) 8788167249 (
T.Y. B. Com Auditing (MCQ'S) by Asst. Prof. Pravin Kad (M. Com., SET, NET) 8788167249 (
T.Y. B. Com
Auditing (MCQ’s)
By Asst. Prof. Pravin Kad (M. Com., SET, NET)
8788167249 ([email protected])
1. An auditor is like a
a) Blood haunt b) Watch dog c) May both according to situation d) None of these
2. The term ‘Audit’ is derived from a Latin word “audire” which means;
a) Statutory audit b) Balance sheet audit c) Concurrent audit d) All of the above
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11. Which of the following statements is not true about continuous audit?
d) It is expensive
d) At the planning state, the auditor considers materiality at the financial statement level only
18. ‘Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example of _
19. the audit risks… the materiality and ……the audit effort
20. When issuing unqualified opinion, the auditor who evaluates the audit findings should be
satisfied that the
21. In determining the level of materiality for an audit, what should not be considered?
a) Helps to determine the nature, timing and extent of other audit procedures
23. Which of the following statements is most closely associated with analytical procedure applied
at substantive stage?
a) Examining the physical existence and valuation of assets. b) Examining the journal and ledger
25. 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.
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c) Carbon copies of sales invoices inspected by the auditor d) Computations made by the auditor
26. Which of the following statements is, generally, correct about the reliability of audit evidence?
27. In an audit of financial statements, substantive tests are audit procedures that
c) Will increase proportionately when the auditor decreases the assessed level of control risk
28. The nature, timing and extent of substantive procedures is related to assessed level of control
risk
29. Which of the following factors is most important in determining the appropriations of audit
evidence?
a) The reliability of audit evidence and its relevance in meeting the audit objective
b) When it is enough to provide a basis for giving reasonable assurance regarding truthfulness
a) The auditor b) The client c) The audit assistants d) The auditor and his audit assistants
33. The working papers which auditor prepares for financial statements audit are: _
34. The quantity of audit working papers complied on engagement would most be affected by
35. Which of the following best describes the primary purpose of audit programme preparation?
36. Which of the following is not an advantage of the preparation of working paper?
37. The auditor’s permanent working paper file should not normally, include
38. For what minimum period should audit working papers be retained by audit firm?
a) For the time period the entity remains a client of the audit firm.
39. Which of the following factors would least likely affect the quantity and content of an auditor’s
working papers?
40. Which of the following statement is true regarding an auditor’s working papers?
b) They should be considered as the principle support for the auditor’s report
c) They should not contain details regarding weaknesses in the internal control system
d) They help the auditor to monitor the effectiveness of the audit firm’s quality control
41. The current file of the auditor’s working papers, generally, should include
42. Knowledge of the entity’s business does not help the auditor to
a) Piece Work Statement. b) Wage sheets c) Minutes book d) Bank pass book.
44. Payment for building purchased should be vouched with the help of
a) Title Deed b) Correspondence with the brokers c) Building Account d) Cash book
46. Receipts from sale of investments should be vouched with the help of
a) Brokers bought notes b) Brokers Sold notes c) Minutes book d) Inventory of investment
47. Which of the following expenses should not be treated as capital expenditure?
c) Legal expenses incurred to defend a suit related to title of patent. The suit has been lost
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50. Who is responsible for the appointment of statutory auditor of a limited company?
53. When restrictions that significantly affect the scope of the audit are imposed by the client, the
auditor generally should issue which of the following opinion?
54. Which of the following report not result in qualification of the auditor’s opinion due to a scope
limitation?
55. The inventory consists of about one per cent of all assets. The client has imposed restriction on
auditor to prohibit observation of stock take. The auditor cannot apply alternate audit procedures.
56. The management of a company, to which AS3 is not applicable, does not include statement of
cash flows in its annual report. The auditor should express
d) Any of these depending upon materiality and pervasiveness and adequacy of disclosure
57. In case the auditor gives a disclaimer of opinion in the audit report which of the following
paragraph(s) of a standard unqualified audit report are modified?
58. A departure from recognized accounting principle is disclosed in a note to the financial
statements. The auditor should
59. An internal auditor discovered that fictitious purchases have been recorded by the purchase
clerk. This indicates absence of which control?
a) Purchase invoices are independently matched with purchase orders and goods received notes
b) Goods received notes requires the signature of individual who authorized the purchase
61. The auditor is most likely to examine related party transactions very carefully while vouching
62. The creditor’s accounts, generally, have credit balance. Debit balance may be due to
63. In case of vouching, the auditor is least likely to examine authorization by appropriate authority
in case of –
64. Which of the following is not true with regard to verification of assets?
b) Its objective is to establish existence, ownership, possession, valuation and disclosure of assets
b) The auditor can rely on a certificate issued by an authorized valuer as to the valuation of assets in the
balance sheet
c) The auditor should value the asset as per generally accepted accounting principle
67. The sequence of steps in the auditor’s consideration of internal control is as follows–
a) Obtain an understanding, design substantive test, perform tests of control, and make a preliminary
assessment of control risk
b) Design substantive tests, obtain an understanding, perform tests of control, and make a preliminary
assessment of control risk
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c) Obtain an understanding, make a preliminary assessment of control risk, perform tests of control,
design substantive procedures.
d) Perform tests of control, obtain and understanding, make a preliminary assessment of control risk,
design
68. Which of the following is not an inherent limitation of internal control system?
70. The primary purpose of performing tests of control is to provide reasonable assurance that_
72. The overall attitude and awareness of an entity’s board of directors concerning the importance
of internal control is reflected in
a) Affects the audit risk b) Affects the level of detection risk that auditor may accept
76. A flow chart, made by the auditor, of an entity’s internal control system is a graphic
representation that depicts the auditor’s.
78. The independence of an internal auditor will most likely be assured if he reports to the
79. In comparison to the independent auditor, an internal auditor is more likely to be concerned
with
80. When an independent auditor relies on the work of an internal auditor, he or she should
b) Examine the system of supervising review and documentation of internal auditor’s work
81. Proper segregation of duties reduces the opportunities in which a person would both
a) Establish controls and executes them b)Records cash receipts and cash payments
c) Perpetuate errors and frauds and conceals them d) Record the transaction in journal and ledger
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83. Before the work of audit is commenced, the auditor plans out the whole of audit work is called
84. A number of checks and controls exercised in a business to ensure its efficient working are
known as
85. A Voucher is a .
90. When a transaction has not been recorded in the books of account either wholly or partially
such errors are called as .
91. 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 .
92. A sale of Rs. 50000 to Mr. A was entered as a sale to Mr. B. This is an example of what?
94. Errors and frauds already committed can be discovered under the system of .
1-b 11-c 21-b 31-d 41-c 51-c 61-c 71-a 81-c 91-b
2-c 12-d 22-d 32-d 42-a 52-d 62-d 72-b 82-a 92-b
3-c 13-a 23-d 33-c 43-b 53-a 63-d 73-a 83-c 93-c
4-d 14-d 24-a 34-b 44-a 54-b 64-a 74-c 84-b 94-a
5-c 15-b 25-c 35-c 45-b 55-c 65-c 75-a 85-a 95-d
6-b 16-d 26-b 36-d 46-b 56-a 66-d 76-a 86-a 96-a
7-c 17-b 27-d 37-a 47-c 57-c 67-c 77-c 87-a
8-b 18-a 28-c 38-c 48-b 58-b 68-c 78-c 88-c
9-d 19-a 29-a 39-d 49-d 59-a 69-c 79-b 89-b
10-c 20-c 30-b 40-b 50-b 60-c 70-d 80-d 90-b