Auditing MCQ Questions and Solutions with Explanations

31

Which of the following statements with regard to rules regarding exemption from branch audit is not true?

A) A branch office of a company can be granted exemption on the basis of quantum of activity criterion B) If a satisfactory arrangement of scrutiny check of the books of account of a branch office of a manufacturing company has been made, it can be exempted from branch audit C) Cost consideration should be considered as an important factor/ground for exemption from branch audit D) The auditor should state in his audit report that branch office is exempted by virtue of quantum of activity or any other basis

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Answer & Solution

Answer: Option B

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32

What are the qualification required to be an auditor of a company?

A) An auditor must have passed M.Com B) An auditor must have passed the exam of India audit and accounts service C) An auditor must be Chartered Accountant under the Chartered Accountant Act, 1949 D) An auditor must be an employee of the company

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Answer & Solution

Answer: Option C

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33

'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:

A) 40 B) 30 C) 60 D) 15

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Answer & Solution

Answer: Option C

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34

Statutory audit is compulsory for:

A) All public limited companies B) All private limited companies C) Both public and private limited companies D) All business enterprises

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Answer & Solution

Answer: Option C

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35

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

A) Within one month of completion of capital subscription state of the company B) Within one month of the promotion of the company C) Within one month of the commencement of the business of the company D) Within one month of incorporation of the company

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Answer & Solution

Answer: Option D

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36

Internal control covers the following:

A) Statutory audit, internal audit and internal check B) Internal check and internal audit only C) Internal check, internal audit, statutory audit and physical control of assets D) None of the above

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Answer & Solution

Answer: Option B

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37

As per AAS4, if auditor detects an error then:

A) He should inform the management B) He should communicate it to the management if it is material C) The auditor should ensure financial statements are adjusted for detected errors D) Both B and C

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Answer & Solution

Answer: Option D

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38

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

A) Auditing B) Testing C) Vouching D) Verification

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Answer & Solution

Answer: Option C

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39

Internal auditor is:

A) a representative of shareholders B) a representative of government C) an employee of the company D) an independent professional

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Answer & Solution

Answer: Option C

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40

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

A) To inspect B) To examine C) To hear D) To investigate

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Answer & Solution

Answer: Option C

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Auditing MCQ Questions and Solutions with Explanations | Commerce