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Auditing MCQ Questions and Solutions with Explanations | Commerce

Auditing MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Auditing MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-4 section-3

Each section contains 100 MCQs on Auditing .
31
Vendors should be approved by Management before purchase department executes an order. If this is not done, then which of the following situations may arise?
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Answer & Solution
Answer: Option D
No explanation is given for this question. Let's Discuss on Board
32
A company auditor should inform the Registrar of Companies, in writing, about the acceptance of his appointment within:
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Answer & Solution
Answer: Option D
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33
During a company audit, the management argues with the auditor that machine has been well maintained hence there is no need for charging depreciation on it. Whether the auditor should:
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Answer & Solution
Answer: Option C
Solution:
Depreciation is a systematic allocation of the depreciable amount of an asset over its useful life. It represents the reduction in value of a fixed asset due to wear and tear, passage of time, or obsolescence.

Even if a machine is well maintained, its value still decreases over time because maintenance only preserves its working condition; it does not prevent loss of value due to usage and aging.

The Companies Act and Generally Accepted Accounting Principles (GAAP) mandate that depreciation must be charged on all fixed assets except land (unless impaired).

If management refuses to charge depreciation, it would lead to an overstatement of assets and profits, thereby misrepresenting the company’s true financial position.

Therefore, the auditor should reject the management’s argument and insist that depreciation be charged as per accounting standards.

Hence, the correct answer is Option C: Reject it.
34
The objective of vouching is:
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Answer & Solution
Answer: Option C
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35
Purchase returns should be vouched with the help of:
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Answer & Solution
Answer: Option B
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36
For which of the following types of enterprises an independent financial audit is required statutorily.
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Answer & Solution
Answer: Option A
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37
The primary purpose of performing tests of control is to provide reasonable assurance that:
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Answer & Solution
Answer: Option D
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38
Which of the following is most crucial to a purchase department?
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Answer & Solution
Answer: Option C
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39
Which of the following statements is not true about continuous audit?
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Answer & Solution
Answer: Option C
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40
The inventory consists of about one per cent of all assets. The client has imposed restriction on auditor to prohibit observation of stock take. The auditor cannot apply alternate audit procedures.
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Answer & Solution
Answer: Option C
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