Auditing MCQ Questions and Solutions with Explanations

11

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

A) the work of the auditor B) the liability of the auditor C) neither the work nor the liability of the auditor D) both the work and the liability of the auditor

Discuss

Answer & Solution

Answer: Option A

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12

The first Auditor of a company is appointed by the

A) Board of Directors B) Shareholders C) Central Government D) Promoters Company

Discuss

Answer & Solution

Answer: Option A

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13

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

A) Undervaluation of closing stock B) Charging capital expenditure to revenue C) Goods sent on consignment being shown as actual sales D) Charging higher rates of depreciation on fixed assets than actually required

Discuss

Answer & Solution

Answer: Option C

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14

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

A) Auditor should attend physical stock taking only if inventory is material B) Auditor may not attend physical verification of stock by management, if he does not find it appropriate to rely on it C) If inventory is material, even when the auditor is not placing reliance on the physical verification by the management, he should attend it D) 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

Discuss

Answer & Solution

Answer: Option C

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15

The scope of the audit including reference to the pronouncements of the ICAI, which the auditor adheres to, generally is communicated to the client in the . . . . . . . .
(i) auditor's report
(ii) engagement letter
(iii) representation letter

A) (i) only B) Both (i) and (ii) C) Both (i) and (iii) D) All of the above

Discuss

Answer & Solution

Answer: Option B

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16

Special audit is necessary for . . . . . . . .

A) inefficient concern B) processing concern C) trading concern D) manufacturing concern

Discuss

Answer & Solution

Answer: Option A

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17

Knowledge of the entity's business does not help the auditor to:

A) Reduce inherent risk B) Identify problem areas C) Evaluate reasonableness of estimates D) Evaluate appropriates of GAAP

Discuss

Answer & Solution

Answer: Option A

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18

Under the Companies Act, the Statutory Cost Audit is conducted as per the provisions of

A) Section 209 (d) B) Section 233 (13) C) Section 233 (B) D) Section 224

Discuss

Answer & Solution

Answer: Option C

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19

While vouching wages, auditor should examine whether there is proper segregation of duties. Which of the following activities should not be done by same department?

A) Maintaining personnel records and approving changing in wages rates B) Proposing pay roll summary and disbursement of wages C) Making salary statements and filing tax returns D) Comparing time clock records with time reports prepared by supervisors and preparing list of workers employed along with the units of production for each one of them

Discuss

Answer & Solution

Answer: Option B

No explanation is given for this question. Let's Discuss on Board

20

Which statement is not true about Management Audit?

A) It appraises managerial performance B) It is a statutory obligation C) It ascertains whether the controls are adequate and effective D) It evaluates plans to meet the objectives

Discuss

Answer & Solution

Answer: Option B

No explanation is given for this question. Let's Discuss on Board

Auditing MCQ Questions and Solutions with Explanations | Commerce