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300+ Auditing Solved MCQs

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Commerce (B Com) , Staff Selection Commission (SSC) .

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

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