Auditing MCQs

Question 1

The balance of cash in often between one to five per cent of total assets. Tick the most appropriate statement with regard to verification of cash in context of this:

Accepted Answer

Cash in always material as materiality is qualitative concept

Answer

No audit of cash is needed when, in auditor's opinion, cash is immaterial. Materiality is a relative concept

Answer

The cash balance need only be audited if the balance is in overdraft

Answer

Cash is to be verified if control risk is assessed as high

Question 2

The current file of the auditor's working papers, generally, should include:

Accepted Answer

A copy of financial statements

Answer

A flowchart of the internal controls

Answer

Organisation charts

Answer

Copies of bond and debentures

Question 3

According to Section 227(1) of Companies Act 1956, the auditor does not have the right-

Accepted Answer

To correct any wrong description

Answer

To sign the audit report

Answer

To see the books, accounts and vouchers of company

Answer

To obtain information and explanation

Question 4

Contents of Audit Report are given in companies Act under section:

Accepted Answer

227

Answer

244

Answer

255

Answer

226

Question 5

"Balance Sheet Audit" in India means the audit of:

Accepted Answer

Balance Sheet and Profit and Loss Account items

Answer

Balance Sheet items

Answer

Assets items of Balance Sheet

Answer

Liability items of Balance Sheet

Question 6

Routine check-up is

Accepted Answer

By the auditors

Answer

By the managers of the organization

Answer

By the employees of the organization

Answer

By shareholders

Question 7

Which of the following statements is not true with respect to management representations obtained as per AAS11?

Accepted Answer

It should always be in working

Answer

Authenticated copy of relevant minutes of meetings may be regarded as management representation

Answer

It may be dated prior to the report date

Answer

It should be addressed to the auditor

Question 8

The creditor's accounts, generally, have credit balance. Debit balance may be due to:

Accepted Answer

Any of these

Answer

Advance paid against an order

Answer

Goods returned

Answer

Wrong debit to supplier account

Question 9

Which of the following implies an enquiry into the valuation, ownership, title, existence and possession of assets?

Accepted Answer

Verification

Answer

Vouching

Answer

Internal check

Answer

Routine checking