Auditing MCQs

Question 1

The overall attitude and awareness of an entity's board of directors concerning the importance of internal control is reflected in

Accepted Answer

Control environment

Answer

Accounting controls

Answer

Control procedures

Answer

Supervision

Question 2

An auditor assesses control risk because it:

Accepted Answer

Affects the level of detection risk that auditor may accept

Answer

Affects the audit risk

Answer

Helps him to fix materiality level for each financial assertion

Answer

Is directly related to inherent risk

Question 3

Lapping is also known as:

Accepted Answer

Teeming and lading

Answer

Embezzlement

Answer

Looping

Answer

Hacking

Question 4

Which of the following are included in test of control?

Accepted Answer

Reperformance and observation

Answer

Inquiry and analytical procedures

Answer

Comparison and conformation

Answer

Inspection and verification

Question 5

Cost audit is not necessary for units engaged in:

Accepted Answer

contracting

Answer

manufacturing

Answer

mining

Answer

processing

Question 6

Internal auditor can be removed

Accepted Answer

By management

Answer

By shareholders

Answer

By statutory auditor

Answer

By Government

Question 7

Which of the following statements is most closely associated with analytical procedure applied at substantive stage?

Accepted Answer

It helps to accumulate evidence supporting the validity of a specific account balance

Answer

It helps to study relationship among balance sheet accounts

Answer

It helps to discover material misstatements in the financial statements

Answer

It helps to identify possible oversights

Question 8

The report of the internal audit is presented to

Accepted Answer

Board of directors

Answer

Government

Answer

Shareholders

Answer

Creditors

Question 9

In case of vouching, the auditor is least likely to examine authorization by appropriate authority in case of

Accepted Answer

Discount allowed to customers as per organizational policy

Answer

Bad debts written off

Answer

Sales return

Answer

Purchase return