SY BCOM

SEM IV AUDITING

MULTIPLE CHOICE QUESTIONS

1) Who is basically responsible for prevention and detection of errors and frauds
a) Management
b) Accountant
c) Auditor
d) Cashier
2) Audit has been derived from the Latin word Audire which means
a) To speak
b) To hear
c) To write
d) To express opinion
3) Auditing is examination of books of accounts in
a) Systematic manner
b) Practical way
c) Therorotical way
d) None of above
4) Accounting begins when book keeping
a) Ends
b) Starts
c) Both a & b
d) None of above
5) The primary objective of audit
a) Detection and prevention of errors and fraud
b) Verification of books of accounts
c) Charging remunertaion for the work
d) None of above
6) An auditor needs
a) Prescribed qualification
b) Practical attitude
c) Support from staff
d) All the above
7) The main duty of auditor is to report on the accounts
a) Examined
b) Maintained
c) Written
d) None of above
8) Investigation is an examination of accounts
 a) For specific purpose
b) To detect and prevent errors and frauds
c) To show true and fair view
d) All the above
9) Financial statements include
a) Balance sheet
b) Profit and losss account
c) Profit and loss account and balance sheet
d) All the above
10) Auditor should form his opinion about the accounts on the basis of
a) Audit report
b) Audit statement
c) Audit evidence
d) None of above
11) What kind of check auditing exercises on employees
a) Administrative
b) Moral
c) Compulsory
d) Official
12) What do you mean by art of showing better finacial position of company than what
actaully it is
a) Secret reserves
b) Window dressing
c) Cash missappropriation
d) All the above
13) Fraud is an
a) Intentional mistake
b) Error
c) Innocent mistake
d) None of above
14) Error means
a) Unintentional mistakes in financial statements
b) Intentional mistakes in financial statements
c) Both a & b
d) None of above
15) Malafide mistake in financial statements are called
a) Error
b) Fraud
c) Threat
d) None of above
16) Which is of the following is an error of ommission
a) Sales of Rs 500 was written in the purchase journal
b) Wages paid to Mohan has been debited to his account
c) The total of the sales journal has not been posted to his sales account
 d) None of these
17) If the financial statements are prepared as per the financial reporting framework,
the auditor gives an opinion that the financial statements
a) Are true and correct
b) Are correct and fair
c) Gives true and fair view
d) Are reliable
18) Objective of an audit of financial statements is to enable the auditor to express an
opinion
a) Whether the financial statements are prepared in accordance with the system of
double entry book keeping.
b) Whether the statements are prepared in accardance with accounting policies lay
down by the management.
c) Whether the financial statements are prepared in accordance with an identified
financial reporting framework.
d) Whether the financial statements are prepared in acvordance with the provisions
of the income tax act.
19) Financial statements need to be prepared in accordance with
a) Relevant statutory requirements
b) Accounting standards issuded by the Institute of Chartered Acountants of India
c) Guidance notes issued by the Institute of Chartered Accountant of India
d) All the above
20) Goods of value of Rs 376 were returned by Ram and were taken into stock on
the same date but no entry was made in the books This is
a) Error of ommission
b) Error of commission
c) Error of principle
d) None of above
21) The total of sales book was not posted to the ledger. This is
a) Error of ommission
b) Error of commission
c) Error of principle
d) None of above
22) Which of the following errors will affect the trial balance?
a) Repairs to buildings have been debited to buildings
b) The total of purchase journal is Rs 2000 short
c) Freight paid on new machinery has been debited to the freight account
d) None of these
23) Which of the following errors is an error of principle?
a) Rs 600 received from Ganapat has been debited to his account
b) Purchase of Rs 2000 has been entered in sales journal
c) Repairs to building have been debited to building account
d) None of above
 24) After preparing the trial balance the accountant finds that the total of the
credit side is short by Rs 1500. The difference will be
a) Credited to suspense account
b) Debited to suspense account
c) Adjusted to any of the debit balance a/c
d) Adjusted to any of the credit balance a/c
25) Repairs to machinery had been charged to machinery a/c. This is
a) Error of ommission
b) Error of commission
c) Error of principle
d) None of above
26) The risk of fraud increases when
a) The working capital is high
b) The cash sales are high
c) The auditors remain same
d) Management is in the hands of single person
27) How many principles are listed in AAS 1 which govern auditor’s professional
obligation?
a) Nine
b) Fourteen
c) Seven
d) Eight
28) Which of the following is not a limitation of audit as per AS 4?
a) An auditor cannot rely on experts
b) Auditor cannot check all the transactions
c) Audit evidence is not conclusive
d) Audit cannot discover all the frauds
29) As per AAS 4 if auditor detects an error then
a) He should submit his resignation
b) He should communicate it to the shareholders
c) The auditor should ensure financial statements are adjusted for detected errors
d) None of above
30) 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 recognised accounting principles have been
consistently followed
31) If the sales book was overcast by Rs 5000 the trial balance
a) Will be affected
b) Will not be affected
c) May be affected
 d) None of above
32) If sales to Ram Rs 143 posted to his account as Rs 134 the trial balance
a) Will not be affected
b) Will be affected
c) May be affected
d) All the above
33) A credit sale was wrongly passed through purchase book,the trial balance
a) Will be affected
b) Will not be affected
c) May be affected
d) All the above
34) Goods taken away by proprietor for personal use were not recorded any where,the
trial balance
a) May be affected
b) Will be affected
c) Will not be affectednon
d) None of above
35) The trial balance will not be affected if transaction is
a) Completely omitted
b) Partially omitted
c) Both a & b
d) All the above
36) Window dressing means
a) Showing correct picture of books of accounts
b) Showing books of accounts attractive than what actually it is
c) Showing books of accounts worst than what actually it is
d) All the above
37) Secret reserve means
a) Showing books of accounts attractive than what actually it is
b) Showing correct picture of books of accounts
c) Showing books of accounts worst than what actually it is
d) All the above
38) Auditing should be conducted
a) Objectively
b) Innocently
c) Practically
d) Subjectively
39) Balance sheet audit includes verification of
a) Assets
b) Liabilities
c) Income and expenditure
d) All the above
40) Balance sheet audit does not include
a) Verification of assets and liabilities
 b) Vouching of income and expenditure
c) Examination of adjusting and closing entries
d) Routine checking
41) Concurrent audit is a part of
a) Internal check system
b) Continuos audit
c) Internal audit system
d) None of above
42) Audit of banks is an example of
a) Statutory audit
b) Continuous audit
c) Balance sheet audit
d) Both a & b
43) Providing more or lee depreciation on assets is an example of
a) Misappropriation of cash
b) Misappropriation of goods
c) Misapproproation of accounts
d) None of above
44) Special audit can be ordered by
a) Central Government
b) State Government
c) Municipality
d) Grampanchayat
45) Cost audit is compulsory for
a) Private Companies
b) Manufacturing Companies
c) Specified Companies
d) Trading Companies
46) Which of the following statement is not true about continuous audit
a) It is conducted at regular intervals
b) It may be carried out on a daily basis
c) It is needed when the organisation has a good internal control system
d) It is expensive
47) Audit in depth is a synonymous for
a) Compelet audit
b) Completed audit
c) Final audit
d) Detailed audit
48) Which of the following is not a fact of statutory audit?
a) Compulsory Audit
b) Governed as per law
c) No prescribed qualification is required
d) Complete audit
49) In India Balance sheet audit is synonymous to
 a) Annual audit
b) Continuous audit
c) Detailed audit
d) Internal audit
50) Audit of cooperative society is
a) Statutory audit
b) Concurrent audit
c) Balance sheet audit
d) All the above
51) In which audit the final accounts can be prepared immediately after the year end
a) Continuous audit
b) Balance sheet audit
c) Cash audit
d) Concurrent audit
52) Balance sheet audit can be done if the inetrnal control system is very
a) Strong
b) Poor
c) Weak
d) Moderate
53) The audit which is less expensive and suitable to small enterprises
a) Periodic audit
b) Continuous audit
c) Statutory audit
d) All the above
54) The audit which is done to declare six monthly results
a) Interim audit
b) Statutory audit
c) Annual audit
d) None of above
55) Which audit is compulsory by law
a) Internal audit
b) Periodic audit
c) Statutory audit
d) Balance sheet audit
56) The audit which is done by the staff members of client
a) Internal audit
b) Statutory audit
c) Annual audit
d) Cash audit
57) The guidelines for concurrent audit are issued by
a) Central Government
b) State government
c) Reserve bank of India
d) IRDA
58) Which audit is done at regular intervals by external auditor
a) Statutory audit
b) Continuous audit
c) Internal audit
d) Balance sheet audit
59) Internal audit conducted by internal auditor is
a) Optional
b) Compulsory
c) Statutory
d) All the above
60) Internal auditor is appointed by
a) Government
b) Management
c) Shareholders
d) Bankers
61) Audit suitable for small business organisations
a) Continuous audit
b) Priodic audit
c) Balance sheet audit concurrent audit
d) None of above
62) Continuous audit is
a) Costly
b) Cheap
c) Done by staff members
d) None of above
63) The aim of interim audit is to
a) To get periodic data on sales,production,profits etc
b) To get data about competitors
c) To get data about busienss environment
d) All the above
64) There is no chance of alteration of figures in
a) Final audit
b) Internal audit
c) Interim audit
d) None of above
65) Which audit contributes to national growth
a) Statutory audit
b) Social audit
c) Balance sheet audit
d) All the above
66) Which audit aims to examine the plans, policies,procedures of amamgement
a) Management audit
b) Tax audit
c) Annual audit
 d) Concurrent audit
67) The audit which is completed between two final audits
a) Interim audit
b) Annual audit
c) Statutory audit
d) Continuous audit
68) The financial audit is intended to
a) Qualified Assurance
b) Absolute Assurance
c) Positive Assurance
d) Reasonable Assurance
69) The verification of cost records is done in
a) Cost audit
b) Annual audit
c) Cash audit
d) Balance sheet audit
70) Audit of small enterprises is
a) Compulsory
b) Voluntary
c) Half yearly
d) None of above
71) The audit program is prepared by
a) The client
b) The client and the auditor
c) The auditor and his assistants
d) The chief accountant
72) Audit working papers records
a) The audit plan
b) The audit procedure performed
c) The conclusion drawn from the evidence obtained
d) All the above
73) Which of the following SA deals with Audit Planning?
a) SA 610
b) SA 300
c) SA 620
d) SA 230
74) Working Papers are the property of the
a) Client
b) Client and the auditor
c) Auditor
d) None of above
75) Which is a link between the client’s records and the auditor’s report
a) News paper
b) Audit working papers
 c) Loose papers
d) Ruled papers
76) An audit programme may be
a) Statutory
b) Permanent
c) Fixed or flexible
d) Standard
77) Audit Plans should be based on knowledge of the client’s
a) Profits
b) Net worth
c) Business
d) Reputation
78) The auditor should plan his work to enable him to conduct an effective audit in
a) A professional manner
b) A proper manner
c) A confident manner
d) An efficient and timely manner
79) Calculating the gross profit as a percentage of sales and comparing it with previous
periods is what type of audit method
a) Inspection
b) Analytical Procedure
c) Observation
d) Inquiry
80) Current file and permanent file are together known as
a) Audit plan
b) Audit programme
c) Audit procedure
d) Audit working papers
81) An auditor cannot have any lien on the books of accounts of the company audited
by him
a) As laid down in section 128of the Companies Act 2013
b) As laid down by the rules of the Institute of Charterd Accountants of India
c) As laid down in SA 230
d) Since the books cannot be removed from the registered office of the company
82) Which of the following is not an advanatge of preparation of working paper?
a) To provide a basis for review of audit work
b) To provide a basis for subsequent audits
c) To ensure audit work is being carried out as per programme
d) To provide a guide for advising another client on similar issues
83) Current audit file relating to audit of partnership firm will not contain
a) Audit plan
b) Audit programme
c) Partnetship deed
d) Letters of confirmation
84) The audit plan should be based on the knowledge of
a) Client’s business
b) Competitors business
c) Business environment
d) All the above
85) Which of the following is a thinking exercise
a) Audit programme
b) Audit plan
c) Audit note book
d) All the above
86) Detailed and written audit plan
a) Audit notes
b) Audit programme
c) Audit plan
d) All the above
87) While designing audit programme which of the following factor should be
considered
a) Nature of business
b) Experience
c) Profitability
d) Efficiency
88) Audit programme facilitates
a) Efficient audit
b) Delay in audit
c) Date wise schedule
d) All the above
89) Bank reconciliation is included in
a) Working papers
b) Audit programme
c) Audit plan
d) Aufit note book
90) Trial balance is a
a) Working paper
b) Audit note book
c) Audit programme
d) Audit plan
91) What is included in audit palnning
a) Audit note book
b) Audit programme
c) Audit file
d) Audit diary
92) The auditor should plan his work to enable him to conduct an effective audit
a) Professional manner
b) Proper manner
 c) Confident manner
d) An efficient and timely manner
93) Which of the following is the property of auditor
a) Audit diary
b) Audit working papers
c) Audit programme
d) All the above
94) Which accounting standard deals with audit working papers
a) SA 100
b) SA 500
c) SA 600
d) SA 230
95) The steps taken to obtain audit evidence
a) Audit plan
b) Audit procedure
c) Audit programme
d) None of the above
96) Audit programme provide a means
a) To control audit work
b) To facilitate systematic audit
c) To guide the audit work in future
d) All the above
97) List of books of accounts is a content in
a) Audit note book
b) Audit working paper
c) Audit plan
d) All the above
98) Audit note book is a
a) Written record of queries during audit
b) Oral record of queries during audit
c) Graphical records of queries
d) All the above
99) Proper audit planning ensures appropriate attention on
a) Least important audit areas
b) Most imortant audit areas
c) Requirements of audit
d) Classification of audit
100) Auditor should plan his work to enable him to conduct audit
a) In effective manner
b) With efficiency
c) In timely manner
d) All the above
1) The steps to obtain audit evidence is called as
a) Audit procedure
b) Audit plan
c) Audit programme
d) Working notes
2) The steps taken for obtaining evidence regarding internal controls is called as
a) Internal control
b) Compliance procedure
c) Substantive procedure
d) All the above
3) Permanent Audit file includes
a) List of client staff members
b) A copy of Memorandum of Association
c) Certification of stock valuation
d) List of bank accounts
4) Substantive procedures are steps taken by auditor to obtain evidence for
a) Transactions during the year
b) Internal control
c) Members of board of directors
d) All the above
5) The expected degree of reliance to be placed on internal control is possible through
a) Audit procedure
b) Audit plan
c) Audit time table
d) None of above
6) Audit plan should determine the nature,timing and extent of
a) Audit plan
b) Audit programme
c) Audit procedure
d) Audit files
7) A copy of audit working papers can be given for reference to
a) Customers
b) Bankers
c) Company
d) Investors
8) Electronic records (e-mails) obtained by auditor from the client form a part of
a) Working papers
b) Audit programme
c) Aulit procedure
d) Audit files
9) For expected scope and conduct of audit, the audit planning involves developing
a) Audit process
 b) An overall audit plan
c) Methods of audit
d) All the above
10) While developing an overall audit plan the following points should be considered
a) Scope of audit work
b) Accounting policies
c) Legal requirements
d) All the above
11) The trial balance for the year under audit will be filed in
a) Permanent audit file
b) Record file
c) Current audit file
d) Temporary file
12) Audit procedures can be classified into
a) Compliance procedure
b) Substantive procedure
c) Both a & b
d) None of above
13) Copies of audited accounts of the earlier years will be filed in
a) Current audit file
b) Audit programme file
c) Permanent audit file
d) Temporary audit file
14) Audit programme can be
a) Orally fixed
b) Copied from last year
c) In writting
d) Taken from old auditors
15) In overall audit plan approach the purpose is to devote attention on
a) Relationship with the client
b) Important aspects of audit
c) Amount of remuneration
d) None of above
16) Auditor should ensure that audit is carried
a) At right time
b) Without bias
c) With honesty
d) All the above
17) Audit note book is a part of
a) Permanent record of the auditor
b) Temporary record of auditor
c) Current records of auditor
d) Audit programme made by auditor
18) Test checking is
 a) Checking the transactions which are tested
b) Checking the selected trabsactions
c) Checking vouchers only
d) Checking cash memos only
19) In test checking the auditor should
a) Keep the system stable
b) Keep changing the methods or test checking at frequent intervals
c) Not be very careful
d) Depend on the records maintained
20) Routine checking is
a) Verification of books of original entry
b) Verification of sample transactions
c) Examination of trial balance
d) Examination of balance sheet
21) Size of the sample depends on
a) Internal control system
b) Test checking
c) Routine checking
d) Balance sheet audit
22) Letter of weakness deals with weakness in
a) Statutory Audit
b) Internal records
c) Financial position
d) None of above
23) Routine checking can ensure
a) Arithmetical accuracy
b) Agreement of balance sheet
c) Recording of the transactions
d) Fraud free accounts
24) Stratification is the process of
a) Deciding the tets check
b) Satisfying the employees
c) Dividing the population into different classes
d) Dividing audit work among the assistants
25) Under random sampling
a) Selected items have the chanceof selection
b) All the items have equal chance of selection
c) Important items have chance of selection
d) Immaterial transactions have no chance of selection
26) Audit sampling is
a) Application of audit procedure for less than 100% transactions
b) Verification of all the transactions
c) Verification of cash transactions
d) Verification of goods distributed as free sample
27) Scientific sample selection involves
a) Selection of the sample scientifically
b) Selection of the sample on random basis
c) Selection of sample statistically
d) Selection of the sample by the employees
28) When designing an audit sample, the auditor should consider
a) The specific audit objectives
b) The population from which the auditor wishes to sample
c) The sample size
d) All the above
29) Through audit sampling the audit evidence about some characterstic of the items
selected can be
a) Obtained and evaluated
b) Ignored
c) Manipulated
d) None of the above
30) Accounting Standard which deals with Audit Sampling
a) SA 530
b) SA 230
c) SA 610
d) SA 200
31) This method of sample selection invloves selecting items using a constant interval
between selections ,the first interval having a random start
a) Random Selection
b) Systematic Selection
c) Haphazard Selection
d) None of above
32) This method of selecting sample ensures that all items in the polulation have an equal
chance of selection
a) Random selection
b) Systematic selection
c) Haphazard selection
d) None of above
33) The checking of selected transactions is called
a) Test checking
b) Routine checking
c) Verifying
d) Totalling
34) Who decides the extent of test checking
a) Management
b) Employees
c) Auditors
d) Bankers
35) The size of sample depends on
 a) Demand from customers
b) Objectives of audit
c) Needs of management
d) All the above
36) Routine checking is
a) Mechanical process
b) Accurate process
c) Difficult process
d) Time saving process
37) In tets checking the client staff becomes
a) Careless
b) Honest
c) Conflicting
d) None of above
38) In which type of sampling all the items of polulation have equal chance of selection
a) Test sampling
b) Random sampling
c) Systematic sampling
d) All the above
39) The process of dividing a population into different classes is called as
a) Random sampling
b) Systematic sampling
c) Stratified sampling
d) None of above
40) Which is a maximum error in population
a) Tolerable error
b) Expected error
c) Routine error
d) All the above
41) The important audit technique is
a) Testing
b) Sampling
c) Totalling
d) Tallying
42) For test checking opening and closing entries are
a) Not suitable
b) Not verified
c) Required
d) Recorded
43) In test checking, from a large number of similar items select and examine
a) All the transactions
b) Journal entries
c) Balances of ledger accounts
d) Representative samples
44) The checking of totals and calculations in sudsidiary books is
a) Test checking
b) Specific checking
c) Routine checking
d) Sample checking
45) All the items in population have an euqal chance of selection in
a) Routine checking
b) Test checking
c) Systematic sampling
d) Random sampling
46) The auditor should select the sample items from the polulation in such a way that the
sample can be
a) Representative
b) Selective
c) Accurate
d) Correct
47) Audit sampling means
a) Only checking balance sheet items
b) Verifying expenses and losses
c) Audit of less than 100% of items
d) All the above
48) The smaller the tolerable error the sample size needed is
a) Smaller
b) Zero
c) Balanced
d) Greater
49) The entire set of data from which the auditor wishes to sample in order to reach
conclusion is
a) Sample
b) Polulation
c) Data
d) Statistics
50) Test checking depends on the judgement of
a) Management
b) Client’s staff
c) Auditor’s staff
d) Auditor
51) Audit sampling is an important
a) Method of totalling
b) Method of tallying books of accounts
c) Audit technique
d) None of above
52) Good internal control system requires
a) Effective managerial suppression and review
 b) Ineffective control
c) Incompetent people
d) Competent auditor
53) The objective of internal cotrol is to
a) Prevent frauds
b) Prevent inefficiency
c) Improve financial soundness
d) Select right people
54) Internal control is subject to
a) Test checking
b) Human error
c) Dynamic conditions
d) Clerical errors in accounting
55) Internal audit is
a) Review of records and systems continously within the organization by staff
b) Review of accounts by auditor
c) Review of systems periodically
d) Review of records by the outside expert
56) Internal auditor is appointed by
a) The management
b) The chief auditor
c) The CEO
d) The shareholders
57) Independent auditor is a
a) Watchdog for outsiders
b) Watchdog for shareholders
c) Watchdog for employees
d) Watchdog for directors
58) Scope of internal audit is decided by
a) The shareholders
b) The management
c) The employees
d) The chief auditor
59) Statutory auditor has a right to attend
a) Shareholders meeting
b) Board meeting
c) Creditors meeting
d) Union meeting
60) What is a correct sequence of the following stages
I.statutory audit
Ii.internal audit
Iii.internal check
a) 1,2,3
b) 2,3,1
 c) 3,2,1
d) 3.1.2
61) Letter of weakness deals with weaknesses in
a) Statutory audit
b) Internal controls
c) Finacial position
d) None of above
62) All types of management control are included in
a) Internal audit
b) Internal check
c) Internal control
d) Management policies
63) Under internal control in purchases the orders should be placed with
a) Approved suppliers
b) Approved debtors
c) Approved bankers
d) Maangement
64) Acounts of various suppliers should be preridically
a) Rejected
b) Confirmed
c) Tallyed
d) Accpted
65) To write off bad debts there should be proper
a) Knowledge
b) Reliability
c) Faith and trust
d) Authority
66) The objective of interanal check is to
a) Prevent errors
b) Bring uniformity
c) Make correction
d) Correct balances of accounts
67) The statutory auditor is appointed under
a) Statute
b) Compulsion
c) Contract
d) None of above
68) Audit by staff within the organisation is called
a) Internal control
b) Internal check
c) Internal audit
d) Management responsibility
69) The duties of employees are changed from time to time in
a) Internal audit
 b) Statutory audit
c) Annual audit
d) Internal check
70) The work is divided in such a way that the documents prepared by one person are
automatically checked by other person under
a) Internal audit
b) Internal check
c) Systematic check
d) Internal control
71) Division of work is an integral aspect of
a) Internal audit
b) Internal control
c) Interbal check
d) None of above
72) One of the features of internal control is
a) Safeguarding assets
b) Accyracy and reliability
c) Smooth conduct of businee
d) All the above
73) The internal audit work should be planned in consultation with the
a) External auditor
b) Employees
c) Shareholders
d) Bankers
74) The copy of the report of internal auditor should be made available to
a) All the shareholders
b) Customers
c) Creditors
d) Statutory auditor
75) Internal audit and internal check are part of
a) Management decisions
b) Internal control
c) Internal check
d) Internal audit
76) Internal auditor need not be
a) An employee
b) Knowledgeable and experienced
c) Chartered accountant
d) None of above
77) Checking the date of voucher on the voucher during vouching mainly helps the
auditor to obtain evidence that
a) The transaction relates to current year
b) The transaction is legal
c) All the transactions are recorded in the books
 d) Transactions take place every day
78) Checking the serial number of vouchers on the voucher during vouching helps the
auditor to obtain evidence that
a) The transactions took place
b) There are no unrecorded transactions
c) The transaction is recorded in the books on the right date
d) The transaction is valid
79) Verifying the signature of authorised official on the voucher during vouching helps
the auditor to check the
a) Occurrence of the transaction
b) Validity of the transaction
c) Amount of the transaction
d) Period of the transaction
80) Checking the amount in words during vouching of cash transactions helps auditor to
a) Detect error of principle
b) Detect errors of commissoion
c) Detect misappropriation
d) None of above
81) Checking the head of account debited or credited during vouching helps the auditor
to
a) Detect error of principle
b) Detect error of ommission
c) Detect Compensating error
d) None of the above
82) The following points should be noted or checked by the auditor in vouching
a) Checking the voucher
b) Checking the supporting documents
c) Checking the entry in the books
d) All the above
83) In case of sales return, the auditor should examine which documents?
a) Credit notes and delivery challan
b) Debit notes and cash memos
c) Purchase invoices and goods received notes
d) Credit notes and goods received notes
84) In order to vouch which of the transactions, the auditor will examine Bill of Entry?
a) Local purchases
b) Purchases on consignment basis
c) Imports
d) Cash purchases
85) In order to vouch which of the transactions,the auditor will examine Bill of Lading?
a) Sales within the state
b) Sales outside the state
c) Exports
d) Sales on approval
86) Checking serial number of vouchers during vouching helps the auditor to
a) Detect errors of principle
b) Detect errors of omission
c) Detect compensating errors
d) None of above
87) To check whether all sales have been recorded, auditor should check
a) Salesmen’s payroll
b) Sales bills
c) Sales order
d) Goods received notes
88) Checking the date of entry of vouchers in the books mainly helps the auditor to
obtain evidence that
a) Entry was made on the same day as that of the voucher
b) There are no missing vouchers
c) The vouchers are filled every day
d) The accountant was not absent on that day
89) Verifying the signature on the supporting purchase bill attached to a voucher helps
the auditor to
a) Identify the person who received the payment for the bill
b) Fix responsibility for errors in preparing bill
c) Identify the person who made the payment for bill
d) Prove that the bill is genuine and valid
90) Serial number of supporting bill from supplier attached with a voucher helps the
auditor to
a) Detect entry of duplicate bill in the register
b) Verify that all the bills are entered serially
c) Verify that all the vouchers are entered serially
d) None of above
91) Checking the signature of the payee during vouching of cash payments helps the
auditor to
a) Verify that the payment is properly authorised
b) Verify that the cheque was signed by an authorised person
c) Verify that the cash received is acknowledged
d) Identify from whom cash was received
92) Verifying the signature of the person preparing the voucher helps the auditor to
a) Fix responsibility for errors in making entry of the voucher
b) Fix responsibility for errors in preparing the voucher
c) Ensure that the voucher is posted in the ledger
d) Ensure that the voucher has proper supporting documents
93) Telephone charges should be examined on the basis of
a) Agreement only
b) Telephone bill
c) Cash memo
d) None of above
94) Wages and salary should be vouched on the basis of
a) Cash book
b) Cash memo
c) Wages and salary register
d) a and b only
95) Sales commission is vouched on the basis of
a) Voucher
b) Cash memo
c) Interest warrant
d) None of above
96) Outstanding rent is vouched on the basis of
a) Rent bills
b) Confirmation letters from tenants
c) Cash memo
d) Both a and b
97) The details of any transaction are recorded as soon as it takes place in the form of
evidence as a
a) Journal
b) Voucher
c) Legder
d) None of above
98) Comparing the entries in the books of accounts with documentary evidence is called
as
a) Verification
b) Confirmation
c) Vouching
d) Valuation
99) One of the techniques of audit is
a) Inspection
b) Totalling
c) Tallying
d) None of above
100) If the payment exceeds Rs 5000 the payee should sign on
a) Recepit
b) Bill
c) Revenue stamp
d) Cheque
101) Vouching is an essence of
a) Accounting
b) Book keeping
c) Recording
d) Auditing
102) The objective of vouching is to
a) Ensure fradulent entries are not recorded
 b) Ensure all the transactions are related to business
c) Ensure all the transactions are properly authenticated by respomsible person
d) All the above

1) Cash sales are supported by

a) Cash memo
b) Journal entry
c) Ledger posting
d) None of above
2) Loan taken can be vouched on the basis of
a) Bank balance
b) Journal entry
c) Loan agreement
d) Voucher
3) Amount of dividend received is shown by
a) Share certificate
b) Dividebd warrant
c) Cash memo
d) None of above
4) Insurance premiun paid is verified from
a) Receipt issued by insurance company
b) Legder account
c) Reminders sent by insurance agents
d) None of above
5) Amount of rent received can be verified from
a) Profit and loss account
b) Balance sheet
c) Rent receipt
d) All the above
6) While checking purchase returns,auditor should check the corrosponding
a) Ledger postings
b) Journal entry
c) Profit and loss acccount
d) Goods received note
7) Voucher should be signed by
a) Payee
b) Banker
c) Client’s staff
d) None of above
8) Payment of salary is supported by
a) Purchase invoice
b) Salary register
c) Rent agreement
d) None of above
9) Auditor can detect errors and fraud with
a) Cask book
b) Bank book
c) Vouching
d) Journal
10) Date of voucher is checked to see that transactions pertains to
a) Current year
b) Time of transaction
c) Verify the amount
d) Parties of transaction
11) Payroll is an example of
a) External document
b) Internal document
c) Bank document
d) Employee document
12) The following points should be noted or checked by the auditor in verification of an
assets
a) Checking the voucher
b) Checking the transactions
c) Checking the entry in books
d) Checking existence,ownership,non ommission and disclosure
13) Stock of goods on consignmnt should be valued at
a) Invoice price
b) Cost or market price whichever is lower
c) Price at which goods were sent to the consignee
d) None of above
14) Closing stock with consignee is to be shown as the asset of
a) The consignor
b) The consignee
c) Both the above
d) None of above
15) Auditor should verify stocks which are not lying with the concern for example goods
on consignment
a) Through physical verification at consignee’s godown
b) Through observing the physical verification carried out by the consignee
c) By obtaining and exmining the confirmation from the consignee
d) By obtaining and examining the confirmation from the consignor
16) While checking the cut off procedure,the auditor should ensure that
a) Sales bill are raised for all goods despatched till the last day of thr accounting year
b) No sales bills are raised unless the goods were actually despatched and sold
during the accounting year
c) Both the above
d) None of above
17) While reconciling a client’s annual physical inventory with book stock,an auditor
observed that for certain items the stock in hand was more than that shown in the
books. This could be the result of the client’s failure to record
a) Purchase returns
b) Sales return
c) Goods with consignor
d) Purchase discount
18) Equity shares of XY Ltd held by ABC Ltd are in the custody of Stock Holding
Corporation of India Limited (SHCIL). The auditor may verify this investment by
a) Reviewing last year’s working papers
b) Obtaining a certificate from a responsible official of the ABC Ltd
c) Obtaining a certificate from SHCL
d) Obtaining a certifucate from XY Ltd
19) Prior period expenses are
a) Expenses of the current year paid in previous year
b) Expesnses of the previuos year paid in current year
c) Expenses of the previous year paid in previuos year
d) Expenses of the current year paid in the next year
20) An auditor is verifying valuation of building which has been self constructed by the
client. Which of the following documents is least relevant to the auditor for
verification purposes?
a) Bills of contractor
b) Minutes of meeting of board of directors
c) Certificate of engineer and architect
d) Loan agreement
21) Prior period expenses are
a) Expenses credited to the current year,s profit and loss account though relating to
eariler years
b) Expenses debited to the curent year’s profit and loss account through relating to
next years
c) Expenses debited to the current year’s profit and loss account though relating to
earlier years
d) Expenses debited to the previous year’s profit and loss account ,though relating to
current years
22) If the market value of the security is less than the outstanding amount of loan taken
a) Difference shuold be shown as loans and advances
b) Difference should be shown as current liability
c) Difference should be shown as unsecured loan
d) None of above
23) A mortgage duly registered under the Transfer of Property Act is known as
a) Equitable mortgage
b) Legal mortgage
c) Hypothecation
d) Pledge
24) Which of the following assets cannot be subjected to physical verification
a) Debtors
b) Land
c) Building
d) Machinery
25) Which document is required while depositing title deeds of the property with the
lender as security
a) Equitable mortage
b) Legal mortage
c) Hypothecation
d) Pledge
26) Goods received notes support entries in
a) Sales book and sales return book
b) Purchase book and sales return book
c) Cash book and purchase book
d) Sales book and purchase return book
27) Which of the following is not true about verification of assets?
a) Invoices substantiation of occurrences of transaction
b) Objective is to establish existence ownership,possession,valuation and disclosure
of assets
c) The auditor has to form an opinion on diffrent aspects
d) All are true
28) While counting cash on hand the auditor should
a) Ensure presence of management representative
b) Obtain a receipt from custodian
c) Ensure postage and revenue stamps are not counted in physical count
d) Temporary advances are counted to calculate balance of cash in hand
29) Verification involves
a) Exitsence,possession and ownership
b) Recording of assets in books of accounts
c) Vouching on the basis of invoice
d) None of above
30) Fixed assets are valued at
a) Cost
b) Cost or market value which ever is less
c) Market value
d) a and b
31) Current investment are held for
a) Not more than one year
b) Not more than 3 years
c) Not less than one year
d) None of above

32) The following is a wasting asset

 a) Mine
b) Patents
c) Copyright
d) Live stock
33) Arrears of prefernce divedend is a
a) Long term liability
b) Contingent liability
c) Fictitious liabiliy
d) Fixed liability
34) Stock is valued at
a) Cost
b) Market value
c) Cost or market value whichever is less
d) Realisable value
35) Patent rights are
a) Intangible fixed assets
b) Tangible assets
c) Fictitious assets
d) None of above
36) Verification involves obtaining and examining evidences in respect of an item of
a) Assets and liabilities
b) Income
c) Expenditure
d) None of above
37) Which procedure ensures seperation of transactions of current year from those of next
year
a) Accounting procedure
b) Cut off procedure
c) Balancing procedure
d) All the above
38) What is the meaning of obtaining written evidence from outside parties regarding
existing assets or liability
a) Valuation
b) Vouching
c) Verification
d) Confirmation
39) If stocks are undervalued the profits and assets will be
a) Understated
b) Overstated
c) Balanced
d) No impact on profit
40) Leasehold building is verified on the basis of
a) Name of building
b) Memorandum of Association
 c) Name of owner
d) Lease agreement
41) The objective of verification is to see that the assets
a) Belong to the clients
b) Belong to customers
c) Belong to creditors
d) Belong to banker
42) Contingent liabilities are discloses in balance sheet as
a) Assets
b) Liabilities
c) Foot note
d) All the above
43) The technique of verification is
a) Valuation
b) Calculation
c) Correction
d) Inspection
44) Public deposits are
a) Secured loan
b) Unsecured loan
c) Both a and b
d) None of above
45) Current assets are
a) Fixed assets
b) Floating assets
c) Liquid assets
d) Liabilities
46) For issue of debentures sanction is necessary by
a) SEBI
b) RBI
c) State Government
d) Central Government
47) Patents and copy rights are
a) Tangible assets
b) Floating assets
c) Wasting asset
d) Intangible asset
48) Verification is done at the
a) Beginning of the year
b) End of the year
c) Beginning and end of year
d) All the above
49) Verification has wider scope than
a) Vouching
 b) Casting
c) Posting
d) Totalling
50) Depreciation on fixed assets is to be provided
a) Monthly
b) Half yearly
c) Yearly
d) Quarterly