MCQ on Advanced Accountancy-Auditing
1) Audit Note Book contains:
---------------------------------------------------------
(A) Various dates of reference.
(B) Details of work done.
(C) Notes regarding item requiring clarification,
explanations, etc.
(D) All of the above.
Ans. : (D) All
of the above.
2) Which of the following has a
broader scope?
(A) Internal Control.
(B) Internal Audit.
(C) Internal Checking.
(D) None of the above.
Ans. : (D)
None of the above.
3) An internal auditor is :
(A) Temporary Employee.
(B) Permanent Employee.
(D) None of the above.
Ans.: (B)
Permanent Employee.
4) The main object of vouching
is :
(A) To prepare trial balance.
(B) Conduct routine checking.
(C) Verify authenticity & authority of
transactions.
(D) Checking of vouchers
Ans.: (D)
Checking of vouchers
5) Valuation is the base of:
(A) Verification.
(B) Marketing.
(C) Internal checking.
(D) Vouching.
Ans. : (A)
Verification.
6) The first auditor or auditors
are appointed by :
(A) Central Government.
(B) Company Law Board.
(C) Board of Directors.
Ans. : (C)
Board of Directors.
7)
A number of checks & controls exercised in a
business to ensure its efficient working is known as :
(A) Internal check.
(B) Internal control.
(C) Internal audit.
(D) Interim check.
Ans. : (A)
Internal check
8) Voucher relates to :
(A) Cash receipt.
(B) Cash payment.
(C) Credit transactions.
(D) All the above.
Ans. : (D) All
the above.
9) Internal check is meant for
:
(A) Prevention of frauds.
(B) Detection of frauds.
(C) Helping audit in depth.
Ans. : (C)
Helping audit in depth.
10) Internal auditor is
appointed by :
(A) The management.
(B) The shareholders.
(C) The government.
(D)
The statutory body.
Ans. : (A) The
management.
11) Auditing begins where
-------- ends.
(A) Selling.
(B) Inventory valuation.
(C) Accounting.
(D) Purchases.
12) A good audit report must at
least meet one of the following qualifications:
(A) It should offer constructive and timely
suggestions to the management.
(B) It should not point out mistakes.
(C) It should not be based on factual information.
(D) It should not be based on balance sheet.
Ans. : (A) It should offer constructive and timely
suggestions to the management.
13) The work of one clerk is
automatically check by another clerk is called :
(A) Internal control.
(B) Internal check.
(C) Internal audit.
(D) None of the above.
Ans.: (B)
Internal check.
14) The owners of the company
are called:
(A) Debenture holders.
(B) Debtors.
(C) Shareholders.
(D) None of the above.
Ans. : (C)
Shareholders.
15) Verification is :
(A) The art of recording the
business transactions.
(B) An examination of the books
of accounts.
(C) The act of establishing the
accuracy of entries in the books of accounts.
Ans. : (C) The act of establishing the accuracy of
entries in the books of accounts.
16) The main object of
investigation is :
(A) To discover errors and frauds.
(B) To prevent errors and
frauds.
(C) To verify statements.
(D) All the above.
Ans. :(D) All
the above.
17) Internal controls and
internal check are :
(A) One and the same.
(B) Different.
(C) Internal control includes internal check.
(D) None of the above.
Ans. : (C)
Internal control includes internal check.
18) An auditor is like a :
(A) Watchman.
(B) Foolish dog.
(C) Mad dog.
(D) Watch dog.
Ans. : . (D)
Watch dog.
19) Special audit is necessary
for:
(A) Inefficient concern.
(C) Trading concern.
(D) Manufacturing concern.
Ans.: (A) Inefficient
concern.
20) The company’s auditor is
expected to give:
(A) His expert opinion about the accounts.
(B) A factual position about the accounts.
(C) A critical review of the accounts.
(D) Financial assistance.
Ans.: (B) A
factual position about the accounts.
21) Auditors of a joint stock
company are appointed by :
(A) Directors of the company.
(B) Annual general meeting.
(C) Election at the annual
general meeting.
(D) Debenture holders.
Ans.: (C)
Election at the annual general meeting.
22) A company auditor can be
removed by :
(A) Board of directors.
(B) Managing director.
(D) General Meeting.
Ans. : (D)
General Meeting.
23) A vacancy caused by
resignation of an auditor is filled by :
(A) Board of directors.
(B) Managing director.
(C) General meeting.
(D) Central government.
Ans. : (C)
General meeting
24) Audit in depth means :
(A) Audit of each and every
item.
(B) Intensive audit of each and
every item.
(C) Intensive audit of few
items.
(D) Audit of a few selected
items.
Ans. : (B)
Intensive audit of each and every item.
25) Concurrent audit is a part
of :
(A) Internal check system.
(B) Continuous audit.
(C) Internal audit system.
Ans. (C)
Internal audit system.
26) Audit in depth is synonymous
for:
(A) Complete audit.
(B) Completed audit.
(C) Final audit.
(D) Detailed audit.
Ans. : (D)
Detailed audit.
27) Balance sheet audit included
verification of :
(A) Assets.
(B) Liabilities.
(C) Income & expenditure accounts where
appropriate.
(D) All of the above.
Ans. : (D) All
of the above.
28) Which of the following
statements is not true about continuous audit?
(A) It is conducted at regular interval.
(B) It may be carried out on daily basis.
(C) It is needed when the organization has a good
internal control system.
Ans. : (C) It
is needed when the organization has a good internal control system.
29) Which of the following is
not a fact of EPA ?
(A) Economic audit.
(B) Efficiency audit.
(C) Expenditure audit.
(D) Effectiveness audit.
Ans.: (C)
Expenditure audit.
30) Balance sheet does not
include :
(A) Verification of assets & liabilities.
(B) Vouching of income & expense accounts
related to assets and liabilities.
(C) Examination of adjusting and auditing &
closing entries.
(D) Routine checks.
Ans.: (D)
Routine checks.
31)
When issuing unqualified opinion the auditor who
evaluates the audit findings should be satisfied that the :
(A) Amount of known
miss-statement is documented in working papers.
(B) Estimates of the total
likely misstatement are less than materiality level.
(C) Estimated of the total
likely misstatement is more than materiality level.
(D) Estimates of the total
likely misstatement cannot be made.
Ans. : (B) Estimates of the total likely misstatement
are less than materiality level.
32) Under check system principle
of_________ is followed.
(A) Division of labour
(B) Division of work
(C) Principle of scalar chain
(D) Accountancy
.ANS : (A)
Division of labour
33) This kind of audit is
generally conducted between two annual audits.
(A) Internal audit
(B) Interim audit
(C) Final audit
(D) Continuous audit
Ans. : (B)
Interim audit.
34)
Before the work of audit is commenced, the auditor
plans out the whole of audit work is known as –
(A) Audit plan
(C) Audit risk
(D) Audit program
Ans. : (D)
Audit program.
35) Internal auditor is appointed by –
(A) The management
(B) The shareholders
(C) The government
(D) statutory body
Ans. : (A) The
management.
36) The audit that is made compulsory under the
statute is called –
(A) Statuary audit
(B) Partial audit
(C) Complete audit
(D) Continues audit
Ans. : (A)
Statuary audit.
37) Who among the following can
be appointed as the auditor of company?
(A) A partner or the director of the company
(B) A person of unsound mind
(C) Mr. ‘Y’ who owes Rs.500
to company
(D) Mr. ‘Z’ who holds the ‘CA’ Certificate
Ans. : Mr. ‘Z’
who holds the ‘CA’ Certificate.
38)
___ is documentary evidence by which the accuracy in
the books of accounts may be proved.
(A) Cheque
(B) Receipt
(C) Voucher
(D) Statement
Ans. : (C)
Voucher.
39) Sale of Rs.50,000 to ‘A’ was entered as a sale
to ‘B’. This is an example of –
(A) Error of omission
(B) Error of commission
(C) Compensating error
(D) Error of Principle.
Ans. : (B)
Error of commission.
40)
In comparison to the independent auditor an internal
auditor is more likely to be concerned with –
(A) Cost accountancy system
(C) Legal compliance
D) Accounting system
Ans. : (B)
Internal control system.
41) The audit program is prepared by –
(A) The auditor
(B) The client
(C) The audit assistants
(D) Auditor & his assistants
Ans. : (D)
Auditor & his assistants.
42) Interim audit refers to –
(A) Examination of accounts
continuously
(B) Examination of accounts
intermittently
(C) Audit work to find out &
check interim profits of a company
(D) Carrying on audit for bonus
purposes at the end of year
Ans. : (C)
Audit work to find out & check interim profits of a company .
43) A company auditor should see that the dividend
is paid –
(A) After charging depreciation
(B) Without charging depreciation
(D)
None of the above.
Ans. : (A)
After charging depreciation.
44) Errors of omission are –
(A) Technical errors
(B) Error of principle
(C) Compensating error
(D) none of these
Ans.: (A)
Technical errors.
45) Vouching implies –
(A) Inspection of receipts
(B) Examination of vouchers to
check authenticity of records
(C) Surprise checking of
accounting records
(D) Examining the various assets
Ans. : (B)
Examination of vouchers to check authenticity of records.
46) Undervaluation of stock is –
(A) Technical error
(B) Compensatory error
(C) Error of principle
Ans. : (C)
Error of principle.
47) Verification refers to –
(A) Examination of journal &
ledger
(B) Examination of vouchers
related to assets
(C) Examining the physical
existence & valuation of assets
(D) Calculation of valuation of
assets
Ans. : (C)
Examining the physical existence & valuation of assets.
48) Valuation of fixed assets is based on the
concept –
(A) Going concern
(B) Money measurement
(C) Dual aspect
(D) Cost concept.
Ans. : (A) Going
concern.
49) “Auditor is not valuer.” This statement was
stated in –
(A)Kingston Cotton Mill Case (B) London & General
Bank Case
(C) Lee VS Neuchatel Co. LTD Case (D) London Oil
Storage Co.LTDCase
Ans. :(A)Kingston Cotton Mill Case.
50) Floating assets are valued at –
(A) Cost
(B) Market price
(C) Cost price or market price
whichever is less
(D) Cost less than depreciation
Ans. : (C)
Cost price or market price whichever is less.
51) Outstanding expenses should be verified with the
help of –
(A) Cashbook
(B) Balance book
(C) Journal proper
(D)None of above.
Ans. : (C)
Journal proper
52) First auditor of the company is appointed by the
–
(A) Shareholders
(B) Central government
(D) Board of directors
Ans. :(D)
Board of directors.
53) The vacancy caused by resignation at a auditor
is filled by –
(A) Board of directors
(B) At the general meeting of
shareholders
(C) By the central government
(D) By the company law board
Ans. : (B) At
the general meeting of shareholders
54) A special auditor is appointed by the –
(A) Shareholders
(B) Board of directors
(C) Central government
(D) CAG
Ans. : (C)
Central government.
55) A remuneration of a company auditor is fixed by
the –
(A) Shareholders
(B) Board of directors
(C) Central Government
Ans. : (D)
Appointing authority.
56) Internal auditor has to submit report to –
(A) Shareholders
(B) Government
(C) Company law board
(D) none of above
Ans. : D) none
of above.
57) Auditor in general is –
(A) Employee of the company
(B) Agent of the company
(C) Agent of the shareholders
(C) None of the above
Ans. : (C)
Agent of the shareholders.
58)
Shares issued for consideration other than cash should
be vouched with help of –
(A) Directors minutes book
(B) Shareholders minute’s book
(C) Contract with the party
concerned
(D) Cash book
Ans. : (C)
Contract with the party concerned.
59) The term Standard Auditing Practices refers –
(A) Auditing techniques adopted
by auditor for collecting & vouching evidences
(B) Test checking
(C) Standards of auditing
(D) True & fair view
Ans. : (A) Auditing techniques adopted by auditor for
collecting & vouching evidences.
60) AAS refers to –
(A) Audit evidence
(B) Audit Planning
(C) Risk assessments
&Internal control
(D) Knowledge of business
Ans. :(D)
Knowledge of business.
61) The panel of Auditors of cooperative society is
maintained by –
(A) Charted Accountant
(B) Central Government
(D) Shareholders
Ans. : (C)
Registrar.
62) Banking Regulation Act was passed in the year–
(A) 1912
(B) 1949
(C) 1956
(D) 1955.
Ans. : (B)
1949.
63)
Which of the following statements is not correct
regarding removal of first auditor before expiry of the term?
(A) He is removed at general
meeting
(B) Shareholders are authorized
to do so
(C) The approval of central
government is required for such removal
(D) The provision for such
removal is contained in Section 224 (7)
Ans. : (C) The
approval of central government is required for such removal
64) Retiring auditor does not have right to –
(A) Make written representations
(B) Get his representation
circulated
(D) Speak as member of company
Ans. :(A) Make
written representations
65) According to Section ___
Special Audit is conducted at the central government
(A) Section 233(A)
(B) Section 233(B)
(C) Section 242(A)
(D) Section 242(B)
Ans. : (C)
Section 242(A).
66) Audit of Banks is an example of –
(A) Statutory Audit
(B) Balance Sheet Audit
(C) Concurrent Audit
(D) All of above
Ans. : (D) All
of above.
67)
Auditor of a _____ company does not have right to visit
foreign branches of company.
(A) Unlimited Company
(B) Manufacturing Company
(D) Non-Profit making company
Ans. : (B)
Manufacturing Company.
68) Cost Audit under Section
233(B) of The Company Act is _____
(A) Voluntary
(B) Compulsory
(C) Advisable.
(D) Avoidable
Ans. : (C)
Avoidable.
69) Internal Auditing Standards are issued by the –
(A) International Accounting
Standard Board
(B) Financial Accounting
Standard Board
(C) International Audit &
Assurance Standard Board
(D) Auditing Practices Board
Ans. : (C)
International Audit & Assurance Standard Board
70) Which of the following is not a duty of an
auditor?
(A) Duty to report company’s
banker
(B) Duty to report to the
members
(C) Duty to sign the audit
report
(D) Duty to report on any
violation of law
Ans. : (A)
Duty to report company’s banker.
71) The main
object of vouching is :
(A) To prepare trial balance.
(B) Conduct routine checking.
(C) Verify authenticity &
authority of transactions.
(D) Checking
of vouchers.
Ans. : (C)
Verify authenticity & authority of transactions
72) Valuation
is the basis of :
(A) Verification.
(B) Marketing.
(C) Internal
checking.
(D) Vouching.
Ans. : (A)
Verification
73) The first
auditor or auditors are appointed by :
(A) Central Government.
(B) Company
Law Board.
(C) Board of
Directors.
(D) Shareholders.
Ans.: (C)
Board Of Directors
74) Voucher
relates to:
(A) Cash receipt.
(B) Cash payment.
(C) Credit transactions.
(D) All the above.
Ans. : All of
the above.
75) Internal
auditor is appointed by :
(A) The management.
(B) The shareholders.
(C) The government.
(D) The statutory body.
Ans. : (A) The management
76) Auditing
begins where -------- ends.
(A) Selling.
(B) Inventory valuation.
(C) Accounting.
(D) Purchases.
Ans. : (C)
Accounting
77) The work of one clerk is
automatically check by another clerk is called :
(A) Internal
control.
(B) Internal
check.
(C) Internal
audit.
(D) None of
the above.
Ans. : (B)
Internal Check
78) The
owners of the company are called:
(A) Debenture holders.
(B) Debtors.
(C) Shareholders.
(D) None of the above.
Ans.: (C)
Shareholders
79) An
auditor is like a :
(A) Watchman.
(B) Foolish dog.
(C) Mad dog.
(D) Watch dog.
Ans.: (D)
Watch dog
80) A company
auditor can be removed by :
(A) Board of directors.
(B) Managing
director.
(C) Any
director.
(D) General
Meeting.
Ans. : (D)
General Meeting
81) This kind
of audit is generally conducted between two annual audits.
(A) Internal audit
(B) Interim audit
(C) Final audit
(D) Continuous audit
Ans.: (B)
Interim audit.
82)
Before the work of audit is
commenced, the auditor plans out the whole of audit work is known as –
(A) Audit plan
(B) Audit
note
(C) Audit
risk
(D) Audit
program
Ans. : (D) Audit program.
83) Internal auditor is appointed
by –
(A) The
management
(B) The
shareholders
(C) The
government
(D) statutory
body
Ans. : (A) The management.
84) The audit that is made
compulsory under the statute is called –
(A) Statuary
audit
(B) Partial
audit
(C) Complete
audit
(D) Continues
audit
Ans. : (A) Statuary audit.
85) Who among
the following can be appointed as the auditor of company?
(A) A partner or the director of
the company
(B) A person of unsound mind
(C) Mr. ‘Y’ who owes Rs.500 to company (D) Mr. ‘Z’ who holds the ‘CA’
Certificate
Ans. : Mr. ‘Z’ who holds the ‘CA’ Certificate.
86)
___ is documentary evidence by
which the accuracy in the books of accounts may be proved.
(A) Cheque
(B) Receipt
(C) Voucher
(D) StatementAns. : (C) Voucher.
87) Sale of Rs.50,000 to ‘A’ was
entered as a sale to ‘B’. This is an example of –
(A) Error of
omission
(B) Error of commission ( C) Compensating error
(D) Error of
Principle.
Ans. : (B) Error of commission.
88)
In comparison to the independent
auditor an internal auditor is more likely to be concerned with –
(A) Cost
accountancy system
(B) Internal
control system
(C) Legal
compliance
D) Accounting system
Ans. : (B) Internal control system.
89) The audit program is prepared
by –
(A) The auditor (B) The client
(C) The audit assistants (D) Auditor & his assistants
Ans. : (D) Auditor & his assistants.
90) Interim audit refers to –
(A) Examination
of accounts continuously
(B) Examination
of accounts intermittently
(C) Audit
work to find out & check interim profits of a company
(D) Carrying
on audit for bonus purposes at the end of year
Ans. : (C) Audit work to find out & check interim profits of a
company .
91) A company auditor should see
that the dividend is paid –
(A) After
charging depreciation
(B) Without
charging depreciation
(C) Out of
capital
(D) None of
the above.
Ans. : (A) After charging depreciation.
92) Errors of omission are –
(A) Technical
errors
(B) Error of
principle
(C) Compensating
error
(D) None of
these
Ans.: (A) Technical errors.
93) Vouching implies –
(A) Inspection
of receipts
(B) Examination
of vouchers to check authenticity of records
(C) Surprise
checking of accounting records
(D) Examining
the various assets
Ans. : (B) Examination of vouchers to check authenticity of records.
94) Undervaluation of stock is –
(A) Technical
error
(B) Compensatory
error
(C) Error of
principle
(D) none of
these
Ans. : (C) Error of principle.
95) Verification refers to –
(A) Examination
of journal & ledger
(B) Examination
of vouchers related to assets
(C) Examining
the physical existence & valuation of assets
(D) Calculation
of valuation of assets
Ans. : (C) Examining the physical existence & valuation of assets.
96) Valuation of fixed assets is
based on the concept –
(A) Going
concern
(B) Money
measurement
(C) Dual
aspect
(D) Cost
concept.
Ans. : (A) Going concern.
97) “Auditor is not valuer.” This statement was stated in – (A)Kingston
Cotton Mill Case
(B) London
& General Bank Case
(C) Lee VS
Neuchatel Co. LTD Case
(D) London
Oil Storage Co.LTD Case
Ans. : (A)Kingston Cotton Mill Case.
98) Floating assets are valued at
–
(A) Cost
(B) Market
price
(C) Cost
price or market price whichever is less
(D) Cost less
than depreciation
Ans. : (C) Cost price or market price whichever is less.
99) Outstanding expenses should
be verified with the help of –
(A) Cashbook
(B) Balance
book
(C) Journal
proper
(D) None of
above.
Ans. : (C) Journal proper
100) First auditor of the company
is appointed by the –
(A) Shareholders
(B) Central
government
(C) Company
law board
(D) Board of
directors
Ans. : (D) Board of directors.
101) Thevacancy caused by
resignation of an auditor is filled by –
(A) Board of
directors
(B) At the
general meeting of shareholders
(C) By the
central government
(D) By the
company law board
Ans. : (B) At the general meeting of shareholders
102) A special auditor is
appointed by the –
(A) Shareholders
(B) Board of
directors
(C) Central
government
(D) CAG
Ans. : (C) Central government.
103) A remuneration of a company auditor is fixed by the – (A)
Shareholders
(B) Board of
directors
(C) Central
Government
(D) Appointing
authority
Ans. : (D) Appointing authority.
104) Internal auditor has to
submit report to –
(A) Shareholders
(B) Government
(C) Company
law board
(D) None of
above
Ans. : D) none of above.
105) Auditor in general is –
(A) Employee
of the company
(B) Agent of
the company
(C) Agent of
the shareholders
(D) None of
the above
Ans. : (C) Agent of the shareholders.
106) Shares
issued for consideration other than cash should be vouched with help
of –
(A) Directors
minutes book
(B) Shareholders
minute’s book
(C) Contract
with the party concerned
(D) Cash book
Ans. : (C) Contract with the party concerned.
107) The term Standard Auditing
Practices refers –
(A) Auditing
techniques adopted by auditor for collecting & vouching evidences
(B) Test
checking
(C) Standards
of auditing
(D) True
& fair view
Ans. : (A) Auditing techniques adopted by auditor
for collecting & vouching evidences.
108) AAS refers to –
(A) Audit
evidence
(B) Audit
Planning
(C) Risk
assessments &Internal control
(D) Knowledge
of business
Ans. : (D) Knowledge of business .
109) The panel of Auditors of
cooperative society is maintained by –
(A) Charted
Accountant
(B) Central
Government
(C) Registrar
(D) Shareholders
Ans. : (C) Registrar.
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