Auditing MCQ Questions and Solutions with Explanations

Section 1 Section 2 Section 3 Section 4 Section 5

1.
Where does balance sheet audit prove to be more efficient?

A. Where the volume of transactions is very high

B. Where efficient system of internal control is applied

C. Where qualified accountants are engaged

D. All of the above

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2.
Cost audit was started in the following year

A. 1965

B. 1968

C. 1971

D. 1975

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3.
The arrangement under which such a system of work is deposited so that the work of one employee is checked by another employee only in the progress of work is called

A. Internal audit

B. Internal control

C. Own audit

D. Routine checks

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4.
Which among the following are NOT qualified to be appointed as auditor of a company?
(1) An individual who is a Chartered Accountant and holds a Certificate of Practice as per CA Act, 1949
(2) A limited liability partnership firm, which has all partners as Chartered Accountants
(3) Officer or employee of a company who is qualified Chartered Accountant degree holder too
(4) Any Chartered Accountant whose appointment will result in the person being the auditor of more than 10 companies
Choose the most appropriate option:

A. (1) and (2)

B. (2), (3) and (4)

C. (3) and (4)

D. (1), (2) and (4)

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5.
An auditor should ascertain that a company pays dividends out of:

A. profits of the current year

B. undistributed profits of the preceding years

C. total of A and B

D. none of the above

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6.
When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the:

A. Amount of known misstatement is documented in working papers

B. Estimates of the total likely misstatement is less than materiality level

C. Estimates of the total likely misstatement is more than materiality level

D. Estimates of the total likely misstatement cannot be made

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7.
Continuous audit is specially needed for:

A. any trading concern

B. small concern

C. banking companies

D. any manufacturing concern

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8.
In case the directions fail to appoint first auditor (s), the shareholders shall appoint them at . . . . . . . . By passing a resolution.

A. a general meeting

B. first annual general meeting

C. statutory meeting

D. annual general meeting

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9.
Which of the following factors is most important in determining the appropriations of audit evidence?

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

B. The objectivity and integrity of the auditor

C. The quantity of audit evidence

D. The independence of the source of evidence

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10.
What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing?

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

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

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

D. He applies random sampling on data which is inaccurate and inconsistent

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Auditing MCQ Questions and Solutions with Explanations | Commerce

1. Where does balance sheet audit prove to be more efficient?

Answer & Solution

2. Cost audit was started in the following year

Answer & Solution

3. The arrangement under which such a system of work is deposited so that the work of one employee is checked by another employee only in the progress of work is called

Answer & Solution

Answer & Solution

5. An auditor should ascertain that a company pays dividends out of:

Answer & Solution

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

Answer & Solution

7. Continuous audit is specially needed for:

Answer & Solution

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

Answer & Solution

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

Answer & Solution

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

Answer & Solution

Read More Section(Auditing)

1.
Where does balance sheet audit prove to be more efficient?

2.
Cost audit was started in the following year

3.
The arrangement under which such a system of work is deposited so that the work of one employee is checked by another employee only in the progress of work is called

5.
An auditor should ascertain that a company pays dividends out of:

6.
When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the:

7.
Continuous audit is specially needed for:

8.
In case the directions fail to appoint first auditor (s), the shareholders shall appoint them at . . . . . . . . By passing a resolution.

9.
Which of the following factors is most important in determining the appropriations of audit evidence?

10.
What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing?