Audit & Assurance
MCQs
1. Which of the following is not true about auditor's duty?
A. The Auditor should express option on financial statements
B. His opinion is no guarantee to future variability of business
C. He is responsible for detection and prevention of frauds and errors in financial statements
D. He should examine whether recognized accounting principal have been consistently followed
2. A sale of Rs.50,000 to a was entered as a sale to B, This is an example of _________.
A. Error of Principle
B. Error of Omission
C. Error of Commission
D. Compensating Error
3. Goods sent on approval have been recorded as credit sales, This is an example of _________.
A. Error of Omission
B. Error of Commission
C. Error of Duplication
D. Error of Principle
4. Which of the following is the most appropriate potential reaction of the auditor to detect a fraud in relation to the existence of inventory?
A. Visit location on surprise basis to observe test counts
B. Request inventory count at the date close to year end
C. Vouch the goods sent on approval basic
D. Prefer analytical procedures
5. Auditor of bank is an example of _________.
A. Statutory audit
B. Balance sheet audit
C. Concurrent Audit
D. None of the above
6. Concurrent audit is a part of _________.
A. Internal Check system
B. Continuous Audit
C. Internal Audit System
D. None of the above
7. In India balance sheet audit is synonymous of _________.
A. Annual Audit
B. Continuous Audit
C. Detailed Audit
D. Statutory Audit
8. Balance sheet audit is includes verification of _________.
A. Assets
B. Liabilities
C. Income and Expenditure
D. All of the above
9. Balance sheet audit does not include __________.
A. Verification of assets and liabilities
B. Vouching of income and expenses related to assets and liabilities
C. Examination of adjusting and closing entries
D. Routine checks
10. Audit is derived from _________ word, Audile.
A. Gujarati
B. Spanish
C. English
D. Latin
11. Audile Means __________.
A. To hear
B. To verify
C. To step
D. To speak
12. The system of process of audit is __________.
A. Verification
B. Vouching
C. Book-keeping
D. Auditing
13. An auditor of company must be __________.
A. B.com
B. M.B.A
C. Chief
D. C. A
14. Reporting is a part of _________.
A. Accountancy
B. auditing
C. Book-keeping
D. Cooking
15. Omitting cash receipt is __________.
A. Misappropriation of Goods
B. Manipulation of books
C. Error of Principle
D. Misappropriation of cash
16. Tearning & Lapping is __________.
A. Detection of Error
B. Prevention of Error
C. Window-Dressing
D. Secret-Reserve
17. Over-Valuation of Assets is known as __________.
A. Secret-Reserve
B. Detection of Error
C. Window-Dressing
D. Prevention of Error
18. Undervaluation of assets is known as _________.
A. Window-Dressing
B. Detection of Error
C. Secret Reserve
D. Prevention of Error
19. Following is not fraud of Misappropriation of cash.
A. Fictitious Payment
B. Tearning & Lapping
C. Wrong allowances rebate discount
D. Over Valuation of Liabilities
20. Following is not fraud or misappropriation of goods.
A. Showing more wastage, scrape act. Then actual
B. Not receipt of goods in stock register
C. Goods withdraw for personal use
D. Alteration is stock register
21. Manipulation fraud is difficult to discover because it is usually committed by __________.
A. Housewife
B. Employee
C. Directors or manager
D. finance minister
22. Which of the following is not Qualities of Auditor
A. Sound Knowledge of accounting & Auditing
B. Clever, Alert, Cautious
C. Honest
D. He must be of suspicious Mentality
23. Statutory audit not implies to ___________.
A. Joint stock companies
B. Temple
C. Banking companies
D. Charitable trust registered under the trust act.
24. Under Statutory audit, the relevant act provide for
A. Appointment & re-appointment of an auditor
B. Qualification & disqualification's of an auditor
C. Removal of an auditor
D. All of the above
25. Where the volume of transaction is very large.
A. Continuous audit is adopted
B. Occasional audit is adopted
C. Annual audit is adopted
D. Partial audit is adopted
26. The wrong allocation of amount between capital and revenue expenditure is a/an.
A. Error of principle
B. Compensating error
C. Error of Commission
D. Trial Balance Error
27. Audit At the end of the financial year is known as;
A. Continuous Audit
B. Interim Audit
C. Operational
D. None of the above
28. Which of the following is not a part of the process of auditing
A. Preparation of Balance sheet & Profit & Loss A/c
B. Preparation of Audit Report
C. Asking for evidence supporting various entries in the accounts
D. All of the above
29. State which of the following statement is True.
A. All errors in the records of an enterprise affect the financial statement.
B. Fraud can be committed through an accounting policy.
C. Errors are irregularities done intentionally,
D. None of the above
30. Under the Companies Act, 1956 audit of annual financial statement is compulsory for
A. Private Limited Companies
B. Public Limited Companies
C. Companies listed on a stock Exchange
D. All of the Above
31. Confirmation technique can be use for
A. Debtors
B. Bills Receivable
C. Bills Payable
D. All of the above
32. In an Audit of Payments, which of the following is the most reliable type of evidence?
A. Receipts issued by the person to whom payment is made
B. Entry relating to payment in bank book
C. Voucher prepared by the payer company
D. None of the above
33. Audit under statute means;
A. An audit ordered by the Government
B. An Audit where duties, rights etc. of the Auditor are laid down by law
C. An audit of a corporation in the public sector
D. All of the above
34. An Auditor _________ a watch dog and _________ a blood hound
A. Not, Is
B. Is, Not
C. Was, Has
D. Has, Was
35. An audit conducted by between the two annual audit know as:
A. Periodical Audit
B. Interim Audit
C. Occasional Audit
D. Internal Audit
36. The Expenses which do not pertain to the current year thought have actually been paid during the current year are called
A. Outstanding expenses
B. Prepaid expenses
C. Deferred revenue expenses
D. None of the above
37. The Word audit is derived from the __________ the Audiure
A. Spanish
B. German
C. Latin
D. Indian
38. The main object of an about is __________.
A. Expression of opinion
B. Detection and prevention of fraud and error
C. Both A and B
D. Depends on types of audit
39. State which of the following statement False:
A. An Auditor is expected to point out to the management, flaws and loopholes in the system of accounting
B. Unless an auditor is able to discover ail frauds and errors, he has not performed its main function.
C. Basically, an auditor reports on the truth or otherwise of the financial statements; prevention and detection of frauds and errors are secondary to this
D. Accounts become incorrect when the principle of double entry is not followed
40. State which of the following statement is True:
A. There is no fraud if the cash used personally by the cashier is made up on demand by the management.
B. A balance sheet is true only on the day it is prepared.
C. The auditor has to approach everyone with suspicion.
D. Compliance with the accounting principles generally need not be insisted upon by the auditor.
41. When two or more errors are committed in such a manner that the ultimate effect of these errors.
A. Errors of commission
B. Compensating error
C. Duplication error
D. Errors of principle
42. An auditor who examines the books of account with due audit care escape liability for a subsequent discover of misstatements arising from error or fraud
A. Can
B. Cannot
C. shall
D. has to
43. __________ audit is less expensive and suitable particularly for small scale business concerns
A. Final Audit
B. Continuous Audit
C. Management Audit
D. Operational Audit
44. __________ audit is an audit conducted on behalf of the management with the objective of assisting the management in effectively discharging its responsibilities,
A. Continuous Audit
B. Statutory Audit
C. Management Audit
D. Final Audit
45. Audit conducted in between the two annual audit is known as
A. Periodical Audit
B. Interim Audit
C. Partial Audit
D. Internal Audit
46. Purchase book records:
A. Credit Purchases only
B. Cash Purchases only
C. Both Cash and credit purchases
D. None of the Above
47. Which one of the following is not a contingent liability?
A. Bills Receivable discounted but not matured
B. Underwriting commission payable
C. Arrears of cumulative Dividend on preference shares
D. Uncalled capital on investments
48. The primary objective of secret reserve is to ________ the tax liability.
A. Increase
B. Match
C. Avoid
D. Calculate
49. Which of the following best describes the primary objective of an independent financial audit?
A. Detection and prevention of frauds.
B. Detection and prevention of errors.
C. Expression of independent opinion by the auditor about the truth and fairness of financial information examined by him
D. All of the above
50. State which of the following statement is TRUE:
A. There is little difference between auditing and accenting as both deals with financial statements.
B. The auditor compares entries in the books of account with the vouchers; and if the two agree his work is done.
C. The auditor must see to it that there is compliance with the companies act or other enactment, if applicable; otherwise, he has to mention the fact of noncompliance in his report
D. Safeguarding the company's property is the function of management; hence the auditor is not concerned with verification of assets and liabilities
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