Auditing MCQ 100

Auditing for Senior
Auditor
50 Solved MCQ’s
By
1. The main objective of
financial audit is________
a) Expression of opinion
b) Detection and prevention of fraud and error
c) Designing internal control system
d) All of these
2. Auditor gives ________
regarding the financial statements
a) True and fair view

b) Correct view
c) Fair view
d) Completely true
3. Auditing begins
where__________ends.
a) Selling
b) Inventory valuation
c) Accounting
d) Purchase
4. Which type of organizations
use auditing services?
a) Non-profit-organizations
b) Business
c) Governments
d) All of the above
5. Auditing should be
a) Independent
b) Compulsory
c) On the request of government
d) None of the above
6. Independence
comprises
a) Independence by mind
b) Independence in appearance
c) Both (a) and (b)
d) None of these
7. If auditor maintains high degree
of independence, it will result in
a) Attention of media
b) Reward by CG
c) Enhanced reliability on financial statements
d) Good relationship with the entity.
8. Auditor should have
knowledge of
A) Accounting
b) Auditing
c) Law applicable on the entity
d) All of these
9. Auditor should have
communication skills in following
areas:
a) Oral skills
b) Written skills
c) Both (a) and (b)
d) He does not require any communication skills
10. Function of audit is
to
a) Detect errors
b) Detect fraud
c) Safeguard the interest of stakeholders
d) All the above
11. Which is NOT the
function of an auditor?
a) To give a true and fair view
b) To take care of all the statutory acts
applicable
c) To do arithmetic checking
d) To prepare accounts
D
12. The basic requirement
which is absent is auditing is
a) Exact accounts
b) Certainty in financial statements
c) Conclusive evidence
d) All of the above
D
13. Which of the following
statement is not true
a) The auditor shall express an opinion on financial statements
b) Auditor’s opinion is not guarantee to future viability of
business c) Auditor is responsible for prevention and detection
of fraud and error in financial statements
d) Auditor should examine whether recognized accounting
principles have been followed
C
14. Auditor should be
done by
a) A professional accountant
b) A certified management accountant
c) A competent and independent person
d) A chartered accountant
C
15. Which of the following is least
likely to be required in an audit?
a) Test appropriateness of journal entries and

adjustment
b) Review accounting estimates for biases
c) Evaluate the business rationale for
significant, unusual transactions
d) Make a legal determination of whether fraud
has occurred
D
16. It is not uncommon
in auditing
a) Giving the satisfaction to the owner regarding the
profits made
b) Protecting the rights of shareholders
c) Helping to give true and fair profits of the organization
d) All of the above
D
17. Auditing has all
features except
a) Done every financial year
b) Based on conclusive evidence
c) Mandatory for companies
B
18. The primary objective of the
ordinary examination of financial
statement by an auditor is the
expression of an opinion on
a) The competence of management in accounting matters
which is implied by whether the opinion is qualified or not
b) The conformity of the statements with the book of
account
c) The conformity of the financial statements with generally
accepted auditing standards applied on a basis consistent
with that of the prior year
D
d) The fairness with which the financial statements present
cash flows and results of operations
19. The principal objective of an audit is the
examination of financial statements of an enterprise
with a view for the auditor to form and express an
independent opinion on the truth and fairness for
the benefit of which one of the following?
a) The members
b) Corporate Governance
c) The Corporate Affairs Commission
d) Government authorities
A
20. The factor which
distinguishes an error from
fraud and other irregularity
is
a) Whether it is a caused by officer of the entity or
employee of the entity
b) Intention
c) Materiality
d) Whether it is caused by the auditor or the client
D
21. Which of the following
statement is TRUE?
a) An external auditor is required for all
types of entity b) External auditors are
appointed by an entity’s management
c) Staff auditors make a report for the
baseline employees d) Staff auditors
work is to identify potential risk areas
for a company
D
22. Pick the odd one
a) Those Charged with Governance

b) Management
c) Employees
d) Auditor
D
23. Pick the odd one C
a) Preparation of financial statements
b) Designing, implementation and maintenance of
internal control system
c) Reporting on true and fair view of financial
statements
d) Compliance with the applicable law and regulation

a) Balance Sheet
B
b) Audit Report
c) Profit & Loss Account
d) Cash Flow Statement
25. When the auditor is an employee of the

organization being audited (Auditee), the A
audit is classified as
a) Internal audit
b) b) External audit
c) c) Both (a) and (b)
d) d) None of these
26. Professional skepticism requires the
auditor assume that management is
a) Reasonably honest
b) Neither honest nor dishonest
B
c) Not necessarily honest
d) Dishonest unless proved otherwise
27. Professional skepticism requires that

the auditor should be_____________
indicating _______________
a) Ignorant, Possible misstatements
B
b) Alert, Possible misstatements
c) Alert, Management bias
d) Ignorant, Possible misstatements.
28. Professional skepticism includes being

alert to, for example
D
a) Audit evidence that contradicts other audit evidence
obtained
b) Overlooking unusual circumstances
29. Holding financial interest in a client and
close business relationship with him give
rise to____________ D
a) Self- review threat
b) Advocacy threat
c) Familiarity threat
d) Self-interest threat
30. If the professional becomes a witness

where the part to litigation is his client, it
will result in _________
B
b) Advocacy threat
31. If the auditor is having long association

with client it will give rise to C
_____________
b) Advocacy threat
32. If the professional who is preparing the
books of accounts is also auditing the
financial statements, it shall give rise to A
a) Self-review threat
b) Advocacy threat
33. If the auditor is facing threat from the

client to be dismissed if he refuses to act as
per their wishes, it shall give rise
B
to___________
a) Familiarity threat
b) Intimidation threat
c) Advocacy threat
d) Self-review threat
34. Standards on Auditing are applicable on A

a) Auditing Engagement
b) Review Engagement
c) Assurance Engagement
35. Standards on Auditing are issued by
a) Accounting Standard Board
b) Quality Review Board
c) Auditing & Assurance Standard Board
C
d) Board of Studies
36. In the financial audit, the auditor

expresses opinion on a) True and Fair view of
financial statements
b) True and Correct view of financial statements
c) Effective operation of internal control system A
d) Business operation of the entity
37. Which of the following is not component

of financial statement
a) Profit and Loss Account
b) Balance Sheet
c) Notes to Accounts
d) Board’s Report
D
a) Checking the vouchers B
b) Preparation of vouchers
c) Evaluation of internal control
39. Which of the following is not type of

engagement standard
a) Standards on Auditing
B
b) Standard on Quality Control
c) Standards on Review Engagement
d) Standards on Assurance Engagement
40. In which of the following engagement

opinion is not expressed A
a) Related Services Engagement
b) Auditing Engagement
c) Review Engagement
d) Assurance Engagement
41. In which of the following engagement
an opinion is expressed on a subject matter
C
other than the historical financial
information
a) Auditing Engagement
b) Review Engagement
c) Assurance Engagement
d) Related Services Engagement
42. Which of the following is not code of

ethics
C
a) Objectivity
b) Integrity
c) Communication skills
d) Professional competence and due care
B
a) Standards on Auditing
b) Standard on Quality Control
c) Standards on Review Engagement
d) Standards on Assurance Engagement
44. How many Standards on Auditing have
been issued
A
a) 32
b) 34
c) 36
d) 38
45. Standards on Auditing

are____________
D
a) Mandatory
b) Optional
c) Discretionary
d) All of these
46. General purpose financial statements A

are prepared as per
a) General purpose financial reporting framework
b) Special purpose financial reporting framework
c) Both (a) and (b)
d) None of these
47. Designing, implementation and
maintenance of internal control system are
the responsibilities of
a) Management of entity
B
b) External Auditor of entity
c) Both (a) and (b)
d) Internal Auditor of entity
48. Auditing engagement can be performed

w.r.t.
B
a) Profit making entity
b) Non-profit making entity
c) Corporate entity only
A
d) Any entity
49. Scope of financial audit is

a) Financial information
b) Non-financial information
c) Both (a) and (b)
d) None of these
50. ______________ along with
other disciplines such as accounting
and law equips you with all the
knowledge that is required to enter
into auditing as a profession.
a) Auditing
b) Taxation
c) Finance
d) Taxation and Finance both
A
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Auditing MCQ 100

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Auditing for Senior

a) True and fair view

a) Test appropriateness of journal entries and

a) Those Charged with Governance

24. Pick the odd one

25. When the auditor is an employee of the

27. Professional skepticism requires that

28. Professional skepticism includes being

30. If the professional becomes a witness

31. If the auditor is having long association

33. If the auditor is facing threat from the

34. Standards on Auditing are applicable on A

36. In the financial audit, the auditor

37. Which of the following is not component

39. Which of the following is not type of

40. In which of the following engagement

42. Which of the following is not code of

45. Standards on Auditing

46. General purpose financial statements A

48. Auditing engagement can be performed

49. Scope of financial audit is

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