McqMate
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) .
| 151. |
Which of the following would prevent double payment of the same voucher? |
| A. | The person signing the cheque should cancel the supporting documents |
| B. | Cheques should be signed by at best two persons |
| C. | The data of payment of vouchers of similar nature should be the same or close to each other |
| D. | All of the above |
| Answer» A. The person signing the cheque should cancel the supporting documents | |
| 152. |
In case of unclaimed wages, the auditor should examine whether |
| A. | The amount has been deposited in a separate bank account |
| B. | Deposited with the cashier |
| C. | Held in a safe deposit box |
| D. | All of these |
| Answer» A. The amount has been deposited in a separate bank account | |
| 153. |
While vouching wages, auditor should examine whether there is proper segregation of duties. Which of the following activities should not be done by same department? |
| A. | Maintaining personnel records and approving changing in wages rates |
| B. | Proposing pay roll summary and disbursement of wages |
| C. | Making salary statements and filing tax returns |
| D. | Comparing time clock records with time reports prepared by supervisors and preparing list of workers employed along with the units of production for each one of them |
| Answer» B. Proposing pay roll summary and disbursement of wages | |
| 154. |
In order to vouch, which of the expenses, the auditor will examine Bill of Entry? |
| A. | Custom |
| B. | Excise duties |
| C. | Sales tax |
| D. | Income tax |
| Answer» A. Custom | |
| 155. |
While vouching, how will the auditor ensure himself that all credit sales transactions have been recorded by the entity? |
| A. | Examining cut-off points |
| B. | Matching entries in the sales book against renumbered sales invoices and goods outward notes |
| C. | Counting the number of invoices and matching the number with entries on sales book |
| D. | Both (a) and (b) |
| Answer» D. Both (a) and (b) | |
| 156. |
In case of sales return, the auditor should examine which documents? |
| A. | Credit notes, advice notes and inward return notes |
| B. | Debit notes, advice notes and inward return notes |
| C. | Purchase invoices, advice notes and inward return notes |
| D. | Credit notes, inspection report and inward return notes |
| Answer» D. Credit notes, inspection report and inward return notes | |
| 157. |
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 |
| C. | Routine checks are performed by internal auditor fortnightly. |
| D. | Purchase function and production function are clubbed in one department |
| Answer» A. Purchase invoices are independently matched with purchase orders and goods received notes | |
| 158. |
Which of the following is most crucial to a purchase department? |
| A. | Reducing the cost of acquisition |
| B. | Selecting supplies |
| C. | Authorizing the acquisition of goods |
| D. | Assuring the quality of goods |
| Answer» C. Authorizing the acquisition of goods | |
| 159. |
The auditor is most likely to examine related party transactions very carefully while vouching |
| A. | Credit sales |
| B. | Sales returns |
| C. | Credit purchases |
| D. | Cash purchases |
| Answer» C. Credit purchases | |
| 160. |
In order to vouch bought ledger, the auditor obtain confirmations from creditors. The principal reason for the auditor to examine suppliers statements at balance sheet date is to obtain evidence that |
| A. | The supplier exist |
| B. | There are no unrecorded liabilities |
| C. | Recorded purchases actually occurred |
| D. | To link creditors with cash book entries |
| Answer» B. There are no unrecorded liabilities | |
| 161. |
The creditor’s accounts, generally, have credit balance. Debit balance may be due to |
| A. | Advance paid against an order |
| B. | Goods returned |
| C. | Wrong debit to supplier account |
| D. | Any of these |
| Answer» D. Any of these | |
| 162. |
In case of vouching, the auditor is least likely to examine authorization by appropriate authority in case of – |
| A. | Bad debts written off |
| B. | Sales return |
| C. | Purchase return |
| D. | Discount allowed to customers as per organizational policy |
| Answer» D. Discount allowed to customers as per organizational policy | |
| 163. |
Vendors should be approved by Management before purchase department executes an order. If this is not done, then which of the following situations may arise? |
| A. | Purchases could be made from vendors whose product quality may not be good |
| B. | Purchases may be made from related parties without management’s knowledge |
| C. | Purchases could be made from vendors who may have offered price to manager purchases |
| D. | Any of these |
| Answer» D. Any of these | |
| 164. |
Which of the following is not true with regard to verification of assets? |
| A. | It invoices substantiation of occurrence of transactions |
| B. | Its objective is to establish existence, ownership, possession, valuation and disclosure of assets |
| C. | The auditor has to form an opinion on different aspects |
| D. | All are true |
| Answer» A. It invoices substantiation of occurrence of transactions | |
| 165. |
Which of the following statements is not true? |
| A. | Valuation of assets is the responsibility of management |
| B. | The auditor can rely on a certificate issued by an authorized valuationer as to the valuation of assets in the balance sheet |
| C. | The auditor should value the asset as per generally accepted accounting principle |
| D. | Valuation is no part of auditor’s duty |
| Answer» C. The auditor should value the asset as per generally accepted accounting principle | |
| 166. |
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. | Certificates of engineer and architect |
| D. | Loan agreement |
| Answer» B. Minutes of meeting of board of directors | |
| 167. |
Which of the following assets is least likely to be subjected to lien? |
| A. | Freehold land |
| B. | Plant and machinery |
| C. | Leasehold property |
| D. | Motor vehicles |
| Answer» C. Leasehold property | |
| 168. |
An analysis of fixed assets account has revealed possibility of unrecorded sale of plant and machinery. Which of the following audit procedures may be adopted to discover it? |
| A. | Examination of property tax files |
| B. | Inquiry of plant manager |
| C. | Examination of debits to accumulated depreciation |
| D. | All of the above |
| Answer» D. All of the above | |
| 169. |
The auditor has noticed existence of recurring losses sale of fixed assets this indicates |
| A. | Depreciation charges are insufficient |
| B. | Policy of sale or disposal of fixed assets needs to be reviewed |
| C. | The sale of assets have not been properly authorized |
| D. | Accounting errors |
| Answer» A. Depreciation charges are insufficient | |
| 170. |
Which of the following financial statements assertions are addressed by testing the cut off for plant asset addition? |
| A. | Existence and ownership |
| B. | Valuation and disclosure |
| C. | Possession and ownership |
| D. | Completeness and valuation |
| Answer» D. Completeness and valuation | |
| 171. |
The auditor while verifying prepaid insurance has concluded that there is inadequate insurance of building, He should__ |
| A. | Modify his audit report |
| B. | Insist it should be disclosed in the notes to financial statements |
| C. | Write it in letter of weakness |
| D. | Both (b) and (c) |
| Answer» D. Both (b) and (c) | |
| 172. |
While verifying intangible assets, an auditor would recomputed amortization charges and determines whether amortization period is reasonable. The auditor tries to establish ….by doing it |
| A. | Valuation |
| B. | Existence |
| C. | Disclosure |
| D. | Possession |
| Answer» A. Valuation | |
| 173. |
When auditing prepaid insurance, an auditor discovers that the insurance policy bond on building is not available for inspection. This may indicate__ |
| A. | No insurance has been undertaken for building |
| B. | Lien on building |
| C. | Insurance premium has not been paid |
| D. | Insurance premium paid but not recorded |
| Answer» B. Lien on building | |
| 174. |
Which of the following controls would ensure that securities are not lost, stolen or diverted? |
| A. | Establish physical barriers over investment securities |
| B. | Maintain files of authorized signatures |
| C. | Segregate investment approval from accounting and from custody of securities |
| D. | All of the above |
| Answer» D. All of the above | |
| 175. |
Which of the following would give the assurance that debtors mentioned on the date of balance sheet actually exist? |
| A. | Sending debtor’s confirmation letters |
| B. | Reviewing subsequent collection |
| C. | Verify debtors against sales document |
| D. | Both (a) and (b) |
| Answer» D. Both (a) and (b) | |
| 176. |
Tests of control are not concerned with_ |
| A. | Existence of controls |
| B. | Effectiveness of controls |
| C. | Continuity of controls |
| D. | Designing of controls |
| Answer» D. Designing of controls | |
| 177. |
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 |
| 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 |
| Answer» C. Obtain an understanding, make a preliminary assessment of control risk, perform tests of control, design substantive procedures. | |
| 178. |
Which of the following is not an inherent limitation of internal control system? |
| A. | Management override |
| B. | Collusion among employees |
| C. | Inefficiency of internal auditor |
| D. | Abuse of authority |
| Answer» C. Inefficiency of internal auditor | |
| 179. |
An auditor should study and evaluate internal controls to |
| A. | Determine whether assets are safeguarded |
| B. | Suggest improvements in internal control |
| C. | Plan audit procedures |
| D. | Express and opinion |
| Answer» C. Plan audit procedures | |
| 180. |
The primary purpose of performing tests of control is to provide reasonable assurance that_ |
| A. | There are no material misstatements due to fraud or error in financial statement |
| B. | Accounting system is well documented |
| C. | Written evidence is there to support transactions |
| D. | if internal control is effective |
| Answer» D. if internal control is effective | |
| 181. |
If the auditor assesses control risk as high…. |
| A. | Document the conclusions |
| B. | Documents the reasons along with conclusions |
| C. | Perform tests of control |
| D. | Perform walk through tests |
| Answer» A. Document the conclusions | |
| 182. |
The overall attitude and awareness of an entity’s board of directors concerning the importance of internal control is reflected in |
| A. | Accounting controls |
| B. | Control environment |
| C. | Control procedures |
| D. | Supervision |
| Answer» B. Control environment | |
| 183. |
Which of the following are included in test of control? |
| A. | Reperformance and observation |
| B. | Inquiry and analytical procedures |
| C. | Comparison and conformation |
| D. | Inspection and verification |
| Answer» A. Reperformance and observation | |
| 184. |
Control risk is assessed at |
| A. | Overall financial statements level |
| B. | Fraud risk factor level |
| C. | Financial statement assertion level |
| D. | Control environment level |
| Answer» C. Financial statement assertion level | |
| 185. |
An auditor assesses control risk because it |
| A. | Affects the audit risk |
| B. | Affects the level of detection risk that auditor may accept |
| C. | Helps him to fix materiality level for each financial assertion |
| D. | Is directly related to inherent risk |
| Answer» B. Affects the level of detection risk that auditor may accept | |
| 186. |
A flow chart, made by the auditor, of an entity’s internal control system is a graphic representation that depicts the auditor’s. |
| A. | Understanding of the system |
| B. | Understanding of fraud risk factors |
| C. | Documentation of assessment of control risk |
| D. | Both (a) and (c) |
| Answer» A. Understanding of the system | |
| 187. |
The performance of tests of control is documented in |
| A. | Audit programme |
| B. | Flow charts |
| C. | Working papers |
| D. | Any of the above |
| Answer» C. Working papers | |
| 188. |
The independence of an internal auditor will most likely be assured if he reports to the |
| A. | President Finance |
| B. | President System |
| C. | Managing Director |
| D. | CEO |
| Answer» C. Managing Director | |
| 189. |
In comparison to the independent auditor, an internal auditor is more likely to be concerned with |
| A. | Cost accounting system |
| B. | Internal control system |
| C. | Legal compliance |
| D. | Accounting system |
| Answer» B. Internal control system | |
| 190. |
When an independent auditor relies on the work of an internal auditor, he or she should |
| A. | Examine the scope of internal auditor’s work |
| B. | Examine the system of supervising review and documentation of internal auditor’s work |
| C. | Adequacy of related audit programme |
| D. | all of the above |
| Answer» D. all of the above | |
| 191. |
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 |
| Answer» C. Perpetuate errors and frauds and conceals them | |
| 192. |
Analytical procedures are least likely to be use in the audit of – |
| A. | Cash balance |
| B. | Investments |
| C. | Bills receivables |
| D. | Debtors |
| Answer» A. Cash balance | |
| 193. |
Which of the following statements is not true with regard to teeming and lading ? |
| A. | It results in the deliberate misappropriation of cash receipts |
| B. | It is associated with cash receipts |
| C. | If same individual maintains cash receipts and cash payments teeming and lading is likely to exist |
| D. | To conceal the shortage, the defraud, usually, tries to keep bank and book amounts in daily agreement so that a bank reconciliation will not detect the irregularity. |
| Answer» C. If same individual maintains cash receipts and cash payments teeming and lading is likely to exist | |
| 194. |
The balance of cash in often between one to five percent of total assets. Tick the most appropriate statement with regard to verification of cash in context of this |
| A. | Cash in always material as materiality is qualitative concept |
| B. | No audit of cash is needed when, in auditor’s opinion, cash is immaterial. Materiality is a relative concept |
| C. | The cash balance need only be audited if the balance is in overdraft |
| D. | Cash is to be verified if control risk is assessed as high |
| Answer» A. Cash in always material as materiality is qualitative concept | |
| 195. |
When counting cash on hand the auditor should ___ |
| A. | Ensure presence of somebody from management |
| B. | Obtain a receipt from custodian as to its return |
| C. | Ensure postage and revenue stamps are not counted in physical count |
| D. | Temporary advances to employees are counted to calculate balance of cash in hand |
| Answer» C. Ensure postage and revenue stamps are not counted in physical count | |
| 196. |
Which of the following statement is not true regard to auditor’s attendance at stock taking? |
| A. | Auditor should attend physical stock taking only if inventory is material |
| B. | Auditor may not attend physical verification of stock by management, if he does not find it appropriate to rely on it |
| C. | If inventory is material, even when the auditor is not placing reliance on the physical verification by the management, he should attend it |
| D. | The primary objective of an auditor’s observation of an entity’s observation of an entity’s stock take is to obtain direct knowledge that the stock and has been property counted |
| Answer» C. If inventory is material, even when the auditor is not placing reliance on the physical verification by the management, he should attend it | |
| 197. |
While observing a client’s annual physical inventory, an auditor conducted test counts for certain test counts were higher than the recorded quantities in the client’s perpetual records. This situation could be the result of the client’s failure to record – |
| A. | Purchase returns |
| B. | Sales returns |
| C. | Goods with consignor |
| D. | Purchase discounts |
| Answer» B. Sales returns | |
| 198. |
Inspection report/receiving report supports 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 |
| Answer» B. Purchase book and sales return book | |
| 199. |
……………….. Starts where …………….. Ends |
| A. | Accounting, auditing |
| B. | Auditing, accounting |
| C. | Vouching, auditing |
| D. | Accounting,vouching |
| Answer» B. Auditing, accounting | |
| 200. |
............ means “proving the truth or confirmation” |
| A. | Vouching |
| B. | Verification |
| C. | Inspection |
| D. | Auditing |
| Answer» B. Verification | |
Done Studing? Take A Test.
Great job completing your study session! Now it's time to put your knowledge to the test. Challenge yourself, see how much you've learned, and identify areas for improvement. Don’t worry, this is all part of the journey to mastery. Ready for the next step? Take a quiz to solidify what you've just studied.