Auditing MCQs

Question 1

When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the:

Accepted Answer

Estimates of the total likely misstatement is more than materiality level

Answer

Amount of known misstatement is documented in working papers

Answer

Estimates of the total likely misstatement is less than materiality level

Answer

Estimates of the total likely misstatement cannot be made

Question 2

Continuous audit is specially needed for:

Accepted Answer

banking companies

Answer

any trading concern

Answer

small concern

Answer

any manufacturing concern

Question 3

In case the directions fail to appoint first auditor (s), the shareholders shall appoint them at . . . . . . . . By passing a resolution.

Accepted Answer

a general meeting

Answer

first annual general meeting

Answer

statutory meeting

Answer

annual general meeting

Question 4

Which of the following factors is most important in determining the appropriations of audit evidence?

Accepted Answer

The reliability of audit evidence and its relevance in meeting the audit objective

Answer

The objectivity and integrity of the auditor

Answer

The quantity of audit evidence

Answer

The independence of the source of evidence

Question 5

What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing?

Accepted Answer

The auditor has ascertained that the balance is materially correct when in actual fact it is not

Answer

The auditor concludes the balance is materially misstated when in actual fact is not

Answer

The auditor has rejected an item from sample which was not supported by documentary evidence

Answer

He applies random sampling on data which is inaccurate and inconsistent

Question 6

The existence of a good system of internal check reduces to a great extent

Accepted Answer

the work of the auditor

Answer

the liability of the auditor

Answer

neither the work nor the liability of the auditor

Answer

both the work and the liability of the auditor

Question 7

The first Auditor of a company is appointed by the

Accepted Answer

Board of Directors

Answer

Shareholders

Answer

Central Government

Answer

Promoters Company

Question 8

Which of the following will not lead to creation of secret reserve?

Accepted Answer

Goods sent on consignment being shown as actual sales

Answer

Undervaluation of closing stock

Answer

Charging capital expenditure to revenue

Answer

Charging higher rates of depreciation on fixed assets than actually required

Question 9

Which of the following statement is not true regard to auditor's attendance at stock taking?

Accepted Answer

If inventory is material, even when the auditor is not placing reliance on the physical verification by the management, he should attend it

Answer

Auditor should attend physical stock taking only if inventory is material

Answer

Auditor may not attend physical verification of stock by management, if he does not find it appropriate to rely on it

Answer

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