Auditing MCQs

Question 1

'XYZ' is a firm of Chartered Accountants having three partners, all of whom are in full time practice. What is the total number of companies for which the firm can act as auditor at a given point of time:

Accepted Answer

60

Answer

40

Answer

30

Answer

15

Question 2

Statutory audit is compulsory for:

Accepted Answer

Both public and private limited companies

Answer

All public limited companies

Answer

All private limited companies

Answer

All business enterprises

Question 3

The board of directors shall appoint first auditor of a company:

Accepted Answer

Within one month of incorporation of the company

Answer

Within one month of completion of capital subscription state of the company

Answer

Within one month of the promotion of the company

Answer

Within one month of the commencement of the business of the company

Question 4

Internal control covers the following:

Accepted Answer

Internal check and internal audit only

Answer

Statutory audit, internal audit and internal check

Answer

Internal check, internal audit, statutory audit and physical control of assets

Answer

None of the above

Question 5

As per AAS4, if auditor detects an error then:

Accepted Answer

Both B and C

Answer

He should inform the management

Answer

He should communicate it to the management if it is material

Answer

The auditor should ensure financial statements are adjusted for detected errors

Question 6

Process of verifying the documentary evidences of transactions are known as:

Accepted Answer

Vouching

Answer

Auditing

Answer

Testing

Answer

Verification

Question 7

Internal auditor is:

Accepted Answer

an employee of the company

Answer

a representative of shareholders

Answer

a representative of government

Answer

an independent professional

Question 8

The term 'Audit' is derived from a Latin word "audire" which means:

Accepted Answer

To hear

Answer

To inspect

Answer

To examine

Answer

To investigate

Question 9

Which of the following statements is correct:

Accepted Answer

Auditing does not guarantee accuracy of accounts

Answer

Auditing is compulsory for all business concerns

Answer

Auditing ensures complete accuracy of accounts

Answer

Auditing guarantess accuracy of accounts