McqMate
1. |
Goods purchased but not recorded in the purchase register is ________________ |
A. | an error of omission |
B. | to reduce profits |
C. | an error of commission |
D. | affect on agreement of trial balance |
Answer» A. an error of omission |
2. |
Working papers are the property of the ________________ |
A. | client and auditor |
B. | auditor |
C. | client |
D. | equity shareholders |
Answer» B. auditor |
3. |
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 |
Answer» D. sales department attendance record |
4. |
The main object of an Audit is ________________ |
A. | to ensure that final accounts are prepared |
B. | expression of an opinion on true and fair view of accounts |
C. | to ensure the future viability of the enterprise |
D. | detection and prevention of frauds and errors |
Answer» B. expression of an opinion on true and fair view of accounts |
5. |
An Audit Programme must be prepared ________________ |
A. | before commencement of an audit |
B. | after completion of an audit |
C. | after submission of an audit report |
D. | during the conduct of an audit |
Answer» A. before commencement of an audit |
6. |
Analytical Review is ________________ |
A. | an audit technique |
B. | audit in depth |
C. | a compliance procedure |
D. | reporting requirement |
Answer» A. an audit technique |
7. |
Audit in Depth means ________________ |
A. | none of the above |
B. | detailed examination of all transactions |
C. | investigation of all transactions |
D. | detailed examination of selected transactions |
Answer» D. detailed examination of selected transactions |
8. |
Audit programme should be ________________ |
A. | flexible |
B. | rigid |
C. | oral and flexible |
D. | oral |
Answer» A. flexible |
9. |
________________ incorporates both Accounting and Administrative Controls. |
A. | internal control |
B. | internal check |
C. | statutory audit |
D. | internal audit |
Answer» A. internal control |
10. |
Debtors are valued at ________________ |
A. | realizable value |
B. | as per articles of association |
C. | book value |
D. | decided by the customer |
Answer» C. book value |
11. |
The main objective of Window Dressing is ________________ |
A. | increase liability |
B. | to mislead investors |
C. | to reduce tax liability |
D. | to understate profits |
Answer» B. to mislead investors |
12. |
________________ document is not relevant for vouching cash purchases |
A. | purchase order |
B. | goods inward register |
C. | purchase invoice |
D. | attendance record of cashier |
Answer» D. attendance record of cashier |
13. |
To select a sample for Audit, the auditor should consider ________________ |
A. | all the above |
B. | the size of the sample |
C. | the volume of transactions |
D. | adequacy of internal control system |
Answer» A. all the above |
14. |
Secret reserves are shown on ________________ |
A. | assets side of balance sheet |
B. | none of the above |
C. | liabilities side of balance sheet |
D. | credit side of trading account |
Answer» B. none of the above |
15. |
Stock of goods on consignment should be valued at ________________ |
A. | none of the above |
B. | invoice price |
C. | cost of realizable value whichever is lower |
D. | cost price |
Answer» C. cost of realizable value whichever is lower |
16. |
________________ is not an error of Commission |
A. | mathematical error |
B. | compensating error |
C. | posting error |
D. | none of the above |
Answer» B. compensating error |
17. |
Telephone charges should be examine on the basis of ________________ |
A. | cash memo |
B. | telephone bill |
C. | all the above |
D. | agreement with telephone department |
Answer» B. telephone bill |
18. |
The Auditor examines Bill of Lading in order to vouch ________________ |
A. | sales within the state |
B. | all the above |
C. | sales outside the state |
D. | sales outside the country |
Answer» D. sales outside the country |
19. |
________________ Asset, which is not subject to physical verification |
A. | stock |
B. | cash |
C. | furniture |
D. | debtors |
Answer» D. debtors |
20. |
Goods sold but not recorded in Sales Register is ________________ |
A. | compensating error |
B. | an error of commission |
C. | an error of omission |
D. | none of the above |
Answer» C. an error of omission |
21. |
Audit plan should be best on knowledge of the ________________ |
A. | client\s reputation |
B. | client\s family |
C. | client\s share capital |
D. | client\s business |
Answer» D. client\s business |
22. |
Confirmation is ________________ |
A. | a compliance procedure |
B. | an audit technique |
C. | a principle of audit |
D. | none of the above |
Answer» B. an audit technique |
23. |
________________ should be checked by the Auditor in verification of Machinery |
A. | all the above |
B. | charge/line |
C. | the possession |
D. | ownership |
Answer» A. all the above |
24. |
Closing stock with the consignee is to be shown as the Asset of ________________ |
A. | consignee |
B. | customer |
C. | all the above |
D. | consignor |
Answer» D. consignor |
25. |
If a material financial fraud is detected, Auditor should ________________ |
A. | report it to police |
B. | report it to the institute of ca of india |
C. | ignore it |
D. | report it to the owners or shareholders |
Answer» D. report it to the owners or shareholders |
26. |
An auditor is like a |
A. | Blood haunt |
B. | Watch dog |
C. | May both according to situation |
D. | None of these |
Answer» B. Watch dog |
27. |
The term ‘Audit’ is derived from a Latin word “audire” which means; |
A. | To inspect |
B. | To examine |
C. | To hear |
D. | To investigate |
Answer» C. To hear |
28. |
Process of verifying the documentary evidences of transactions are known as: |
A. | Auditing |
B. | Testing |
C. | Vouching |
D. | Verification |
Answer» C. Vouching |
29. |
Auditing is compulsory for |
A. | Small scale business |
B. | Partnership firms |
C. | Joint stock Companies |
D. | Proprietary Concerns |
Answer» C. Joint stock Companies |
30. |
The main object of an audit is ___ |
A. | Expression of expert opinion |
B. | Detection and Prevention of fraud and error |
C. | Both (a) and (b) |
D. | Depends on the type of audit. |
Answer» D. Depends on the type of audit. |
31. |
Concealment of shortage by delaying the recording of cash receipts is known as |
A. | Embezzlement |
B. | Misappropriation |
C. | Lapping |
D. | None of these |
Answer» C. Lapping |
32. |
The title of AAS2 issued by Council of ICAI is ___ |
A. | Objective and Scope of the Financial Statements |
B. | Objective and Scope of the Audit of Financial Statements |
C. | Objective and Scope of Business of an Entity |
D. | Objective and Scope of Financial Statements Audit |
Answer» B. Objective and Scope of the Audit of Financial Statements |
33. |
Lapping is also known as: |
A. | Teeming and lading |
B. | Embezzlement |
C. | Looping |
D. | Hacking |
Answer» A. Teeming and lading |
34. |
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 principle have been consistently |
Answer» C. He is responsible for detection and prevention of frauds and errors in financial statements |
35. |
A sale of Rs. 25,000 to A was entered as a sale to B. This is an example of _ |
A. | Error of omission |
B. | Error of commission |
C. | Compensating error |
D. | Error of principle |
Answer» B. Error of commission |
36. |
‘Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example of _ |
A. | Error of principle |
B. | Error of commission |
C. | Error of omission |
D. | Error of duplication |
Answer» A. Error of principle |
37. |
Which of the following statements is not true? |
A. | Management fraud is more difficult to detect than employee fraud |
B. | Internal control system reduces the possibility of occurrence of employee fraud and management fraud |
C. | The auditor’s responsibility for detection and prevention of errors and frauds is similar. |
D. | All statements are correct. |
Answer» B. Internal control system reduces the possibility of occurrence of employee fraud and management fraud |
38. |
As per AAS4, if auditor detects an error then – |
A. | He should inform the management. |
B. | He should communicate it to the management if it is material |
C. | The auditor should ensure financial statements are adjusted for detected errors. |
D. | Both (b) and (c) |
Answer» D. Both (b) and (c) |
39. |
Which of the following is not a limitation of audit as per AAS4? |
A. | Objectivity of auditor’s judgment |
B. | Selective testing |
C. | Persuasiveness of evidence |
D. | Limitations of internal control system. |
Answer» A. Objectivity of auditor’s judgment |
40. |
Internal audit is undertaken |
A. | By independent auditor |
B. | Statutorily appointed auditor |
C. | By a person appointed by the management |
D. | By a government auditor |
Answer» C. By a person appointed by the management |
41. |
The scope of internal audit is decided by the : |
A. | Shareholders |
B. | Management |
C. | Government |
D. | Law |
Answer» B. Management |
42. |
Audit of banks is an example of – |
A. | Statutory audit |
B. | Balance sheet audit |
C. | Concurrent audit |
D. | All of the above |
Answer» D. All of the above |
43. |
Concurrent audit is a part of |
A. | Internal check system |
B. | Continuous audit |
C. | Internal audit system |
D. | None |
Answer» C. Internal audit system |
44. |
In India, balance sheet audit is synonymous to |
A. | Annual audit |
B. | Continuous audit |
C. | Detailed audit |
D. | Statutory audit |
Answer» A. Annual audit |
45. |
Audit in depth is synonymous for |
A. | Complete audit |
B. | Completed audit |
C. | Final audit |
D. | Detailed audit |
Answer» D. Detailed audit |
46. |
Institute of Chartered Accountants of India was established |
A. | 1956 |
B. | 1949 |
C. | 1956 |
D. | 1948 |
Answer» B. 1949 |
47. |
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. It is needed when the organization has a good internal control system |
48. |
Internal check is carried on by |
A. | Staff specially appointed for the purpose |
B. | Internal auditor |
C. | Supervisor of the staff |
D. | Members of the staff |
Answer» D. Members of the staff |
49. |
Errors of Omission are |
A. | Technical errors |
B. | Errors of principle |
C. | Compensating errors |
D. | None of the above |
Answer» A. Technical errors |
50. |
Window dressing implies: |
A. | Curtailment of expenses |
B. | Checking of Wastages |
C. | Under valuation of assets |
D. | Over Valuation of assets |
Answer» D. Over Valuation of assets |
51. |
Test Checking refers to |
A. | Testing of accounts and records |
B. | Checking of selected number of transactions |
C. | Examination of adjusting and closing entries |
D. | Checking of all transactions recorded |
Answer» B. Checking of selected number of transactions |
52. |
Which of the following statements is not correct about materiality? |
A. | Materiality is a relative concept |
B. | Materiality judgments involve both quantitative and qualitative judgments |
C. | Auditor’s consideration of materiality is influenced by the auditor’s perception of the needs of an informed decision maker who will rely on the financial statements |
D. | At the planning state, the auditor considers materiality at the financial statement level only |
Answer» D. At the planning state, the auditor considers materiality at the financial statement level only |
53. |
…...the audit risks… the materiality and ……the audit effort |
A. | Lower, Higher, Lower |
B. | Lower, Lower, Higher |
C. | Higher, Lower, Lower |
D. | Lower, Higher, Higher |
Answer» A. Lower, Higher, Lower |
54. |
When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the |
A. | Amount of known misstatement is documented in working papers |
B. | Estimates of the total likely misstatement is less than materiality level |
C. | Estimate of the total likely misstatement is more than materially level |
D. | Estimates of the total likely misstatement cannot be made |
Answer» C. Estimate of the total likely misstatement is more than materially level |
55. |
In determining the level of materiality for an audit, what should not be considered? |
A. | Prior year’s errors |
B. | The auditor’s remuneration |
C. | Adjusted interim financial statements |
D. | Prior year’s financial statements |
Answer» B. The auditor’s remuneration |
56. |
Analytical procedures issued in the planning stage of an audit, generally |
A. | Helps to determine the nature, timing and extent of other audit procedures |
B. | Directs attention to potential risk areas |
C. | Indicates important aspects of business |
D. | All of the above |
Answer» D. All of the above |
57. |
Which of the following statements is most closely associated with analytical procedure applied at substantive stage? |
A. | It helps to study relationship among balance sheet accounts |
B. | It helps to discover material misstatements in the financial statements |
C. | It helps to identify possible oversights |
D. | It helps to accumulate evidence supporting the validity of a specific account balance |
Answer» D. It helps to accumulate evidence supporting the validity of a specific account balance |
58. |
For all audits of financial statements made in accordance with AAS14, the use of analytical procedures is at the discretion of the auditor in which stage? |
A. | Substantive testing |
B. | Planning stage |
C. | Overall review stage |
D. | All of the above |
Answer» A. Substantive testing |
59. |
Verification refers to : |
A. | Examining the physical existence and valuation of assets. |
B. | Examining the journal and ledger |
C. | Examination of vouchers related to assets. |
D. | None of the above. |
Answer» A. Examining the physical existence and valuation of assets. |
60. |
Stock should be valued at |
A. | Cost |
B. | Market price |
C. | Cost or Market price whichever is lower. |
D. | Cost less depreciation. |
Answer» C. Cost or Market price whichever is lower. |
61. |
‘Auditor is not a valuer’, was stated in |
A. | Kingston Cotton Mills case |
B. | London Oil Storage Co. Case |
C. | London and General Bank case |
D. | None of the above |
Answer» A. Kingston Cotton Mills case |
62. |
Floating assets are valued at |
A. | cost |
B. | Market price |
C. | Cost or market price whichever is lower |
D. | Cost less depreciation |
Answer» C. Cost or market price whichever is lower |
63. |
Goods sold on the basis of ‘sales or return ‘ should |
A. | Be included in the stock |
B. | Not be included in the stock |
C. | Not be checked by auditor |
D. | None of the above |
Answer» A. Be included in the stock |
64. |
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. | Carbon copies of sales invoices inspected by the auditor |
D. | Computations made by the auditor |
Answer» C. Carbon copies of sales invoices inspected by the auditor |
65. |
Which of the following statements is, generally, correct about the reliability of audit evidence? |
A. | To be reliable, evidence should conclusive rather than persuasive |
B. | Effective internal control system provides reliable audit evidence |
C. | Evidence obtained from outside sources routed through the client |
D. | All are correct. |
Answer» B. Effective internal control system provides reliable audit evidence |
66. |
In an audit of financial statements, substantive tests are audit procedures that __ |
A. | May be eliminated for an account balance under certain conditions |
B. | Are designed to discover significant subsequent events |
C. | Will increase proportionately when the auditor decreases the assessed level of control risk |
D. | May be test of transactions, test of balance and analytical procedures |
Answer» D. May be test of transactions, test of balance and analytical procedures |
67. |
The nature, timing and extent of substantive procedures is related to assessed level of control risk |
A. | Randomly |
B. | Disproportionately |
C. | Directly |
D. | Inversely |
Answer» C. Directly |
68. |
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. | The objectivity and integrity of the auditor |
C. | The quantity of audit evidence |
D. | The independence of the source of evidence |
Answer» A. The reliability of audit evidence and its relevance in meeting the audit objective |
69. |
When is evidential matter, generally, considered sufficient? |
A. | When it constitutes entire population |
B. | When it is enough to provide a basis for giving reasonable assurance regarding truthfulness |
C. | When it is objective and relevant |
D. | When auditor collects and evaluates it independently |
Answer» B. When it is enough to provide a basis for giving reasonable assurance regarding truthfulness |
70. |
Which of the following is not corroborative evidence? |
A. | Minutes of meetings |
B. | Confirmations from debtors |
C. | Information gathered by auditor through observation |
D. | Worksheet supporting consolidated financial statements |
Answer» D. Worksheet supporting consolidated financial statements |
71. |
Which of the following statements is not true with respect to management representations obtained as per AAS11? |
A. | Authenticated copy of relevant minutes of meetings may be regarded as management representation |
B. | It should always be in working |
C. | It may be dated prior to the report date |
D. | It should be addressed to the auditor |
Answer» B. It should always be in working |
72. |
What would most appropriately describe the risk of incorrect rejection in terms of substantive testing? |
A. | The auditor concludes balance is materially correct when in actual fact it is not |
B. | The auditor concludes that the balance is materially misstated when in actual fact it not |
C. | The auditor has rejected an item for sample which was material |
D. | None of the above |
Answer» B. The auditor concludes that the balance is materially misstated when in actual fact it not |
73. |
Which of the following affects audit effectiveness? |
A. | Risk of over reliance |
B. | Risk of incorrect rejection |
C. | Risk of incorrect acceptance |
D. | Both (a) and (c) |
Answer» D. Both (a) and (c) |
74. |
What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing? |
A. | The auditor has ascertained that the balance is materially correct when in actual fact it is not |
B. | The auditor concludes the balance is materially misstated when in actual fact is not |
C. | The auditor has rejected an item from sample which was not supported by documentary evidence |
D. | He applies random sampling on data which is inaccurate and inconsistent |
Answer» A. The auditor has ascertained that the balance is materially correct when in actual fact it is not |
75. |
Which of the following Auditing Assurance Standard deals with Audit Planning? |
A. | AAS7 |
B. | AAS8 |
C. | AAS9 |
D. | AAS3 |
Answer» B. AAS8 |
76. |
Audit programme is prepared by |
A. | The auditor |
B. | The client |
C. | The audit assistants |
D. | The auditor and his audit assistants |
Answer» D. The auditor and his audit assistants |
77. |
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. Owned by the auditor |
78. |
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. Auditor’s experience and professional judgment |
79. |
Which of the following best describes the primary purpose of audit programme preparation? |
A. | To detect errors or fraud. |
B. | To comply with GAAP |
C. | To gather sufficient appropriate evidence |
D. | To assess audit risk |
Answer» C. To gather sufficient appropriate evidence |
80. |
Which of the following is not an advantage of the 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 |
Answer» D. To provide a guide for advising another client on similar issues |
81. |
The auditor’s permanent working paper file should not normally, include |
A. | Extracts from client’s bank statements |
B. | Past year’s financial statements |
C. | Attorney’s letters |
D. | Debt agreements |
Answer» A. Extracts from client’s bank statements |
82. |
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. |
B. | For a period of ten years |
C. | For a period auditor opines them to be useful in servicing the client |
D. | For the period the audit firm is in existence. |
Answer» C. For a period auditor opines them to be useful in servicing the client |
83. |
Which of the following factors would least likely affect the quantity and content of an auditor’s working papers |
A. | The assessed level of control risk |
B. | The possibility of peer review |
C. | The nature of auditor’s report |
D. | The content of management representation letter |
Answer» D. The content of management representation letter |
84. |
Which of the following statement is true regarding an auditor’s working papers? |
A. | They document the level of independence maintained by the auditor |
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 |
Answer» B. They should be considered as the principle support for the auditor’s report |
85. |
Which of the following statement best describes the understanding with respect to ownership and custody of working papers prepared by an auditor? |
A. | The working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation |
B. | The safe custody of working papers is the responsibility of client, if kept at his premises |
C. | The working papers must be retained by an audit firm for a period of 10 years |
D. | Successor auditors may have access to working papers of the predecessor auditors. The approval of client is not required. |
Answer» A. The working papers may be obtained by third parties when they appear to be relevant to issues raised in litigation |
86. |
The current file of the auditor’s working papers, generally, should include |
A. | A flowchart of the internal controls |
B. | Organisation charts |
C. | A copy of financial statements |
D. | Copies of bond and debentures |
Answer» C. A copy of financial statements |
87. |
Knowledge of the entity’s business does not help the auditor to |
A. | Reduce inherent risk |
B. | Identify problem areas |
C. | Evaluate reasonableness of estimates |
D. | Evaluate appropriates of GAAP. |
Answer» A. Reduce inherent risk |
88. |
Payment for wage should be vouched with the help of |
A. | Piece Work Statement. |
B. | Wage sheets |
C. | Minutes book |
D. | Bank pass book. |
Answer» B. Wage sheets |
89. |
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 |
Answer» A. Title Deed |
90. |
Purchase returns should be vouched with the help of |
A. | Bought notes |
B. | Credit notes |
C. | Goods inward book |
D. | Cash book |
Answer» B. Credit notes |
91. |
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 |
Answer» B. Brokers Sold notes |
92. |
Which of the following expenses should not be treated as capital expenditure? |
A. | Expenses paid on installation of a plant. |
B. | Cost of dismantling a building in case a new building is to be constructed on the land |
C. | Legal expenses incurred to defend a suit related to title of patent. The suit has been lost |
D. | The fees paid to engineer who constructed the plant. |
Answer» C. Legal expenses incurred to defend a suit related to title of patent. The suit has been lost |
93. |
Which of the following is not a revenue expense? |
A. | Cost of raising a loan |
B. | Cost of accessories of motor vehicles spent at the time of purchase |
C. | Expenses incurred for laying of sewers on land purchased |
D. | Insurance premium paid at the time of registration of the ship |
Answer» B. Cost of accessories of motor vehicles spent at the time of purchase |
94. |
Depreciation does not arise form _______ |
A. | Effluxion of time |
B. | Use |
C. | Obsolescence through technology be market changes |
D. | Remarket expectation |
Answer» D. Remarket expectation |
95. |
Which of the following Schedule of the Companies Act, 1956 deals with depreciations? |
A. | Schedule XIV |
B. | Schedule V |
C. | Schedule XIII |
D. | Schedule X |
Answer» A. Schedule XIV |
96. |
Schedule XIV has prescribed rates of depreciation for double shift and triple shift working for which one of the following assets? |
A. | Building |
B. | Plant and Machinery |
C. | Furniture and fittings |
D. | Ships |
Answer» B. Plant and Machinery |
97. |
A company has bought patents. Which of the following methods is most suitable for providing depreciation on them? |
A. | SLM |
B. | WDV |
C. | Sum of year digits |
D. | Any of the above |
Answer» A. SLM |
98. |
Which of the following is a revenue reserve? |
A. | Capital redemption reserve |
B. | Security premium account |
C. | Debenture redemption reserve |
D. | Capital reserve |
Answer» C. Debenture redemption reserve |
99. |
Which of the following will not lead to creation of secret reserve? |
A. | Undervaluation of closing stock |
B. | Charging capital expenditure to revenue |
C. | Goods sent on consignment being shown as actual sales |
D. | Charging higher rates of depreciation on fixed assets than actually required |
Answer» C. Goods sent on consignment being shown as actual sales |
100. |
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. | All of the above |
Answer» B. Members of the company |
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