Auditing One Model Question

Science Journal of Business and Management
2022; X(X): XX-XX
doi: 10.11648/j.XXXX.2022XXXX.XX
ISSN: 2331-0626 (Print); ISSN: 2331-0634 (Online)
3. The most comprehensive type of

audit is the ……… system audit,
1. Various types of quality audits
are: which examines suitability and
effectiveness of the system as a
A. product
whole.
B. process
A. quantity
C. management (system)
B. quality
D. registration (certification)
C. Preliminary
E) All of above
D. sequential
Answer: E
Answer: B
2. When the auditor is an employee
of the organization being 4. Each of the three parties involved
in an audit …………………….
audited (auditee), the audit is
classified as an …….. quality plays a role that contributes to its
audit. success.
A. internal A. the client, the auditor, and the

auditeer
B. external
B. the client, the auditor, and the
C. compliance
audite
D. Both A & B
C. the client, the moderator, and the
Answer: A
auditee
2Hunde Emiru Abeku: Assessing Customer Satisfaction on Service Delivery of
Cooperative Bank of Oromiya Nekemte Branch
D. the client, the auditor, and the following:

auditee (choose the one NOT requireD.
Answer: D 1. Type of audit conducted
5. An audit is usually conducted in 2. Characteristics of audit
three steps:
3. Identification of involved parties:
(1) A pre-examination or opening auditor, auditee, and third
meeting with the auditee marks
party
the
4. Audit team members
beginning of the process.
5. Critical nonconformities and
(2) involves a suitability audit of the
other observations
documented procedures against
6. Audit standards and reference
the selected reference standard.
documents used
(3) the auditor examines in depth
7. Determination of proper
the implementation of the
corrective action(s)
quality
8. Duration of audit
system.
A. 1
A. True
B. 2
B. False
C. 4
Answer: A
D. 8
6. The audit final report should
include, at a minimum, the Answer: B
Science Journal of Business and Management 2022; X(X): XX-XX 3
7. The time required and costs B. client

involved in an external audit are C. internal auditor
much higher as compared to D. auditee
internal audits.
Answer: D
A. True
10. For the benefit of the
B. False organisation, quality auditing
Answer: A should
8. Audit is a fact-finding process only report non-conformances and

that compares actual results with corrective actions, but should
…………………. not highlight areas of good practice.
A. specified standards and plans A. True
B. expected results B. False
C. premature results Answer: B
D. preliminary results AUDITING MCQs
Answer: A 11. Who among the following can be

appointed as auditor of a
9. The ……… is also expected to
provide the resources needed company?
and A. A partner or a director of the
select staff members to accompany company.
the auditors. B. A person of unsound mind.
A. auditor
C. Mr. Y who owes Rs. 500 to the accounts examined by him

company. __________.
D. Mr. Z the holder of C.A A. to the shareholders.
certificate.
B. to the court.
Answer: D
C. to the bank.
12. Confirmation of the court is
D. to the general public.
necessary for __________.
Answer: A
A. increasing the share capital.
15. Sale of land is a __________.
B. reduction of share capital.
A. revenue receipt.
C. conversion of shares into stock.
B. capital receipt.
D. issue of new shares.
C. capital expenditure.
Answer: B
D. revenue expenditure
13. Audit means ___________.
Answer: B
A. recording business transactions.
16. Secret reserve can be created by
B. preparing the final accounts.
_______________.
C. examination of books, accounts,
A. public limited company only
vouchers etc.
B. banking and financial companies
D. preparing final accounts.
only.
Answer: C
C. private limited company only.
14. Auditor shall report on the
D. co-operative societies
Answer: B Answer: B
17. When a transaction has not 19. Vouching of the balances of all
been recorded in the books of incomes and expenses account
account either wholly or partially is known as vouching of ______.

such errors are called as A. Personal ledger.
_________. B. Impersonal ledger.
A. Error of commission
C. Cash
B. Error of omission. D. Sales
C. Compensating error. Answer: B
D. Error of principle. 20. Preliminary expenses are the
Answer: B best example for _________.
18. Verification of the value of A. fictitious asset.

assets, liabilities, the balance of B. intangible asset.
reserves, provision and the amount C. wasting asset.
of profit earned or loss
D. floating asset.
suffered a firm is called _________.
Answer: A
A. Continuous audit.
21. Periodical audit is also called as
B. Balance sheet audit. _________.
C. Interim audit. A. Final audit.
D. Partial audit. B. Interim audit.
C. Balance sheet audit. Answer: B
D. Income statement audit. 24. One of the audit procedures to

check the issue of share capital
Answer: C
of the newly formed company is
22. The auditor of a government
__________.
company shall be appointed by
A. the memorandum of association
________.
and articles of association.
A. the government company itself.
B. the share transfer register.
B. the central government.
C. the issue of debenture.
C. the share holders.
D. none of the above.
D. the debenture holders.
Answer: A
Answer: B
25. The work of one clerk is
23. The main object of the audit of
automatically check by another
the cash book may be ________.
clerk
A. to verify the assets and liabilities.
is called _________.
B. to know that all receipts and
A. Internal control.
payments have been properly
B. Internal check.
recorded.
C. Internal audit.
C. to check the internal control
system in business. D. None of the above.
D. to check the bank balance. Answer: B

26. The owners of the company are Answer: D

called __________. 29. The liabilities of an auditor can
A. Debenture holders. be _________.
B. Debtors A. Civil
C. Shareholders B. Criminal
D. None of the above. C. Civil and Criminal.
Answer: C D. Official
27. The main objects of Answer: C

investigation is _________. 30. Internal auditor of a company
A. to discover errors and frauds. must be _______________.
B. to prevent errors and frauds. A. Cost accountant.
C. to verify statements. B. Chartered accountant.
D. all the above C. ICWA
Answer: D D. need not possess any professional

qualification.
28. Share may be issued
_____________. Answer: B
A. at par. 31. A vacancy caused by resignation

of an auditor is filled by
B. at premium.
_________.
C. at discount.
A. board of directors.
D. all the above.
B. managing director. C. the managing director of the

company appoints a person to
C. general meeting.
fill the
D. central government.
vacancy.
Answer: C
D. none of these can appoint a
32. Cost audit under section 233(B.
person to fill the vacancy.
of the companies act is
Answer: A
___________.
34. The most difficult type of
A. voluntary
misstatement to detect fraud is
B. compulsory
based on __________.
C. advisable
A. related party purchases.
D. avoidable
B. related party sales.
Answer: C
C. the restatement of sales.
33. When at an annual general
D. omission of a sales transaction
meeting of a company no auditor
from being recorded.
is
Answer: D
appointed or reappointed. In that
35. Professional skepticism requires
case ________
that the auditor assume that
A. the central government appoints
management is _________.
a person to fill the vacancy
A. reasonably honest.
B. the board of directors appoints a
person to fill the vacancy. B. neither honest nor dishonest.
C. not necessarily honest. entity should ______________.
D. dishonest unless proved A. engage experts.

otherwise. B. obtain knowledge of matters that
Answer: B relate to the nature of entity
36. The use of an audit engagement business.

letter is the best method of C. inform management about it.
assuring the auditor will have
D. take help of other auditors.
which of the following?
Answer: B
A. Auditor will obtain sufficient
38. Audit of banks is an example of
appropriate audit evidence.
__________.
B. Management representation
A. Statutory audit.
letter.
B. Balance sheet audit.
C. Access to all books, accounts and
vouchers required for audit C. Concurrent audit.
purpose. D. All of the above.
D. Co-operation from other Answer: D

auditors 39. In India balance sheet audit is
Answer: C synonymous to
_______________.
37. An auditor who accepts an audit
but does not posses the A. Annual audit.
industry expertise of the business B. Continuous audit.

C. Detailed audit. should not be considered?
D. Statutory audit. A. Prior years errors.
Answer: A B. The auditor remuneration.
40. Balance sheet audit included C. Adjusted interim financial

verification of ________. statement.
A. assets D. Prior year financial statements.
B. liabilities Answer: B
C. income and expenditure 43. Which of the following

accounts where appropriate. statement is most closely
associated
D. all of the above.
with analytical procedure applied at
Answer: D
substantive stage?
41. Which of the following is not a
A. It helps to study relationship
fact of EPA?
among balance sheet accounts.
A. Economic audit.
B. It helps to discover material
B. Efficiency audit.
misstatements in the financial
C. Expenditure audit.
statements.
D. Effectiveness audit.
C. It helps to identify possible
Answer: C oversights.
42. In determining the level of D. It helps to accumulate evidence

materiality for an audit what supporting the validity of a
specific D. AAS-3.
account balance Answer: B
Answer: D 46. Audit Programme is prepared

by ___________.
44. Of the following, which is the
least persuasive type of audit A. the auditor.
evidence? B. the client.
A. Bank statements obtained from C. the audit assistants.

the client D. the auditor and his audit
B. Documents obtained by auditor assistants.
from third parties directly. Answer: D
C. Carbon copies of sales invoices 47. The quantity of audit working
inspected by the auditor papers complied on engagement
D. Computations made by the would most be affected by
auditor. _________________.
Answer: C A. management integrity.
45. Which of the following Auditing B. auditor experience and
Assurance Standard deals with professional judgement.
Audit planning? C. Auditor qualification.
A. AAS-7. D. control risk.
B. AAS-8. Answer: A
C. AAS-9.
48. Which of the following is not an D. Section 224(3) and Section 224(4)
advantage of the preparation Answer: A
of working paper? 50. The board of directors shall
A. To provide a basis for review of appoint first auditor of a
audit work. company
B. To provide a basis for subsequent ___________.

audits A. within one month of completion
C. To ensure audit work is being of capital subscription state of
carried out as per Programme. the
D. To provide a guide for advising company

another client on similar issues. B. within one month of the
Answer: D promotion of the company.
49. Which of the following sections C. within one month of the

deals with qualification of the commencement of the business
of the
auditor?
company.
A. Section 226(1) and Section
226(2). D. within one month of
incorporation of the company.
B. Section 224(1) and Section
224(2). Answer: D
C. Section 226(3) and Section 51. In case the directions fail to

226(4). appoint first auditors, the
shareholders shall appoint them at removal of first auditor before

_______ by passing a resolution. expiry of the term?
A. a general meeting. A. He is removed at a general

meeting.
B. first annual general meeting.
B. The shareholders are authorized
C. statutory meeting.
to do so
D. annual general meeting
C. The approval of the central
Answer: A
government is required for such
52. The auditor of a government
removal.
company is appointed by the C
D. The provision for such removal
&
are contained in section 224(7)
AG. His remuneration is fixed by
Answer: C
_____________.
54. The retiring auditor does not
A. the C & AG.
have a right to _________.
B. the shareholders.
A. make written representations.
C. the shareholders at an annual
B. get his representation circulated.
general meeting.
C. be heard at the meeting.
D. the board of directors.
D. speak as a member of the
Answer: B
company.
53. Which of the following
Answer: D
statement is not correct
regarding 55. Auditor of a _______ company
does not have right to visit A. four years.
foreign branches of the company. B. five years.
A. unlimited liability. C. six years.
B. manufacturing D. seven years.
C. banking Answer: C
D. non-profit making. 58. Audit of transactions does not

include __________.
Answer: B
A. propriety audit.
56. Special audit is conducted at the
order of the central B. efficiency cum performance
audit.
government. Which section givers
such powers? C. audit of receipts.
A. Section 233(A.. D. audit of expenditure.
B. section 233(B. Answer: B
C. section 242(A. 59. Audit of rent, deposits and

remittances does not cover
D. Section 242(B..
____________.
Answer: C
A. audit of borrowings.
57. As per C & AG Act, 1971 the
tenure of the comptroller and B. audit of amortization of debt.
Auditor General is ______ a. four C. audit of sanctions

years. D. remittance audit.
Answer: C B. Market price
60. The statutory auditor of a C. Cost or market price whichever

Government Company submits is lower
his D. Cost less depreciation
report to _________ Answer: C.Cost or market price
A. the BOD of the company whichever is lower
B. the C & AG. 63. Goods sold on the basis of ‘sales

or return ‘ should
C. the legislature.
A. Be included in the stock
D. the company secretary.
B. Not be included in the stock
Answer: B
C. Not be checked by auditor
61. ‘Auditor is not a valuer’, was
stated in D. None of the above
A. Kingston Cotton Mills case Answer: A.Be included in the stock
B. London Oil Storage Co. Case 64. Of the following, which is the
least persuasive type of audit
C. London and General Bank case
evidence?
D. None of the above
A. Bank statements obtained from
Answer: A.Kingston Cotton Mills
the client
case
B. Documents obtained by auditor
62. Floating assets are valued at
from third parties directly.
A. cost
C. Carbon copies of sales invoices
inspected by the auditor statements, substantive tests are

audit
D. Computations made by the
auditor procedures that __
Answer: C.Carbon copies of sales A. May be eliminated for an

invoices inspected by the auditor account balance under certain
conditions
statements is, generally, correct B. Are designed to discover
about significant subsequent events
the reliability of audit evidence? C. Will increase proportionately

when the auditor decreases the
A. To be reliable, evidence should
conclusive rather than assessed level of control risk
persuasive D. May be test of transactions, test
B. Effective internal control system of balance and analytical
provides reliable audit evidence procedures
C. Evidence obtained from outside Answer: D.May be test of

sources routed through the client transactions, test of balance and
analytical
D. All are correct.
Answer: B.Effective internal procedures

control system provides reliable 67. The nature, timing and extent of
audit substantive procedures is
evidence related to assessed level of control

risk
66. In an audit of financial
A. Randomly generally, considered sufficient?
B. Disproportionately A. When it constitutes entire

population
C. Directly
B. When it is enough to provide a
D. Inversely
basis for giving reasonable
Answer: C.Directly
assurance regarding truthfulness
68. Which of the following factors is
C. When it is objective and relevant
most important in
D. When auditor collects and
determining the appropriations of
evaluates it independently
audit evidence?
Answer: B.When it is enough to
A. The reliability of audit evidence
provide a basis for giving
and its relevance in meeting the
reasonable
audit objective
assurance regarding truthfulness
B. The objectivity and integrity of
70. Which of the following is not
the auditor
corroborative evidence?
C. The quantity of audit evidence
A. Minutes of meetings
D. The independence of the source
B. Confirmations from debtors
of evidence
C. Information gathered by auditor
Answer: A.The reliability of audit
through observation
evidence and its relevance in
D. Worksheet supporting
meeting the audit objective
consolidated financial statements
69. When is evidential matter,
Answer: D.Worksheet supporting A. The auditor concludes balance is

consolidated financial statements materially correct when in
actual
statements is not true with fact it is not
respect to B. The auditor concludes that the
managementrepresentations balance is materially misstated
obtained as per AAS11? when
A. Authenticated copy of relevant in actual fact it not

minutes of meetings may be C. The auditor has rejected an item
regarded as management for sample which was material
representation D. None of the above
B. It should always be in working Answer: B.The auditor concludes
C. It may be dated prior to the that the balance is materially
report date misstated when in actual fact it not
D. It should be addressed to the 73. Which of the following affects
auditor audit effectiveness?
Answer: B.It should always be in A. Risk of over reliance
working
B. Risk of incorrect rejection
72. What would most appropriately
C. Risk of incorrect acceptance
describe the risk of incorrect
D. Both (a) and (c)
rejection in terms of substantive
testing? Answer: D.Both (a) and (c)
74. What would most effectively 75. Which of the following Auditing
describe the risk of incorrect Assurance Standard deals with
acceptance in terms of substantive Audit Planning?

audit testing? A. AAS7
A. The auditor has ascertained that B. AAS8
the balance is materially correct
C. AAS9
when in actual fact it is not
D. AAS3
B. The auditor concludes the
Answer: B.AAS8
balance is materially misstated
when in 76. Audit programme is prepared
by
actual fact is not
A. The auditor
C. The auditor has rejected an item
from sample which was not B. The client
supported by documentary C. The audit assistants

evidence D. The auditor and his audit
D. He applies random sampling on assistants
data which is inaccurate and Answer: D.The auditor and his
inconsistent audit assistants
Answer: A.The auditor has 77. The working papers which

ascertained that the balance is auditor prepares for financial
materially statements audit are: _
correct when in actual fact it is not
A. Evidence for audit conclusions B. To comply with GAAP
B. Owned by the client C. To gather sufficient appropriate

evidence
C. Owned by the auditor
D. To assess audit risk
D. Retained in auditor’s office until
a change in auditors Answer: C.To gather sufficient
appropriate evidence
Answer: C.Owned by the auditor
80. Which of the following is not an
78. The quantity of audit working
advantage of the preparation
papers complied on engagement
of working paper?
would most be affected by
A. To provide a basis for review of
A. Management’s integrity
audit work
B. Auditor’s experience and
B. To provide a basis for subsequent
professional judgment
audits
C. Auditor’s qualification
C. To ensure audit work is being
D. Control risk
carried out as per programme
Answer: B.Auditor’s experience
D. To provide a guide for advising
and professional judgment
another client on similar issues
79. Which of the following best
Answer: D.To provide a guide for
describes the primary purpose of
advising another client on
audit programme preparation? similar
A. To detect errors or fraud. issues

81. The auditor’s permanent in existence.

working paper file should not Answer: C.For a period auditor
normally, include opines them to be useful in
servicing
A. Extracts from client’s bank
statements the client
B. Past year’s financial statements 83. Which of the following factors

would least likely affect the
C. Attorney’s letters
quantity and content of an auditor’s
D. Debt agreements
working papers
Answer: A.Extracts from client’s
A. The assessed level of control risk
bank statements
B. The possibility of peer review
82. For what minimum period
should audit working papers be C. The nature of auditor’s report
retained by audit firm? D. The content of management

representation letter
A. For the time period the entity
remains a client of the audit Answer: D.The content of
firm. management representation
letter
B. For a period of ten years
C. For a period auditor opines them
statement is true regarding an
to be useful in servicing the
auditor’s
client
working papers?
D. For the period the audit firm is
A. They document the level of working

independence maintained by the papers prepared by an auditor?
auditor
A. The working papers may be
B. They should be considered as the obtained by third parties when
principle support for the they
auditor’s
appear to be relevant to issues
report raised in litigation
C. They should not contain details B. The safe custody of working
regarding weaknesses in the papers is the responsibility of
internal control system client, if
D. They help the auditor to monitor kept at his premises

the effectiveness of the audit C. The working papers must be
firm’s retained by an audit firm for a
quality control period
Answer: B.They should be of 10 years

considered as the principle D. Successor auditors may have
support for the access to working papers of the
auditor’s report predecessor auditors. The approval
85. Which of the following of client is not required.
statement best describes the Answer: A.The working papers
understanding with respect to may be obtained by third parties
ownership and custody of when
they appear to be relevant to issues 88. Payment for wage should be

raised in litigation vouched with the help of
86. The current file of the auditor’s A. Piece Work Statement.

working papers, generally, B. Wage sheets
should include C. Minutes book
A. A flowchart of the internal D. Bank pass book.
controls
Answer: B.Wage sheets
B. Organisation charts
89. Payment for building purchased
C. A copy of financial statements should be vouched with the
D. Copies of bond and debentures help of
Answer: C.A copy of financial A. Title Deed
statements
B. Correspondence with the brokers
87. Knowledge of the entity’s
C. Building Account
business does not help the
auditor to D. Cash book
A. Reduce inherent risk Answer: A.Title Deed
B. Identify problem areas 90. Purchase returns should be

vouched with the help of
C. Evaluate reasonableness of
estimates A. Bought notes
D. Evaluate appropriates of GAAP. B. Credit notes
Answer: A.Reduce inherent risk C. Goods inward book

D. Cash book patent.
Answer: B.Credit notes The suit has been lost
91. Receipts from sale of D. The fees paid to engineer who

investments should be vouched constructed the plant.
with the Answer: C.Legal expenses incurred
help of to defend a suit related to title of
A. Brokers bought notes patent. The suit has been lost
B. Brokers Sold notes 93. Which of the following is not a

revenue expense?
C. Minutes book
A. Cost of raising a loan
D. Inventory of investment
B. Cost of accessories of motor
Answer: B.Brokers Sold notes
vehicles spent at the time of
92. Which of the following expenses
purchase
should not be treated as
C. Expenses incurred for laying of
capital expenditure?
sewers on land purchased
A. Expenses paid on installation of
D. Insurance premium paid at the
a plant.
time of registration of the ship
B. Cost of dismantling a building in
Answer: B.Cost of accessories of
case a new building is to be
motor vehicles spent at the time
constructed on the land of
C. Legal expenses incurred to purchase

defend a suit related to title of
94. Depreciation does not arise form assets?

_______ A. Building
A. Effluxion of time B. Plant and Machinery
B. Use C. Furniture and fittings
C. Obsolescence through technology D. Ships
be market changes
Answer: B.Plant and Machinery
D. Remarket expectation
97. A company has bought patents.
Answer: D.Remarket expectation Which of the following
95. Which of the following Schedule methods is most suitable for
of the Companies Act, 1956 providing depreciation on them?
deals with depreciations? A. SLM
A. Schedule XIV B. WDV
B. Schedule V C. Sum of year digits
C. Schedule XIII D. Any of the above
D. Schedule X Answer: A.SLM
Answer: A.Schedule XIV 98. Which of the following is a
96. Schedule XIV has prescribed revenue reserve?
rates of depreciation for double A. Capital redemption reserve
shift and triple shift working for B. Security premium account
which one of the following
C. Debenture redemption reserve
D. Capital reserve A. Directors of the company
Answer: C.Debenture redemption B. Members of the company

reserve C. The Central Government
99. Which of the following will not D. All of the above
lead to creation of secret
Answer: B.Members of the
reserve? company
A. Undervaluation of closing stock
101. Which of the following sections
B. Charging capital expenditure to deal with qualifications of the
revenue auditor ?
C. Goods sent on consignment being A. Section 226 (1) and section
shown as actual sales 226(2)
D. Charging higher rates of B. Section 224 (1) and section 224
depreciation on fixed assets than (2)
actually
C. Section 226 (3) and section
required 226(4)
Answer: C.Goods sent on 101. Which of the following sections
consignment being shown as deal with qualifications of the
actual sales
auditor ?
100. Who is responsible for the
A. Section 226 (1) and section
appointment of statutory auditor
226(2)
of a limited company?
B. Section 224 (1) and section 224
(2) person
C. Section 226 (3) and section is disqualified from being appointed

226(4) as a statutory auditor if he
D. Section 224(3) & Sec.224 holds
Answer: A.Section 226 (1) and A. Equity shares or debentures of

section 226(2) the company
102. Which of the following B. Equity shares carrying voting of

statement is not true? the company
A. A partnership firm can be C. Shares carrying voting rights of

appointed as a statutory auditor the company
of D. Security carrying voting rights of
limited company the company
B. Appointment can be made in the Answer: D.Security carrying voting

name of the firm rights of the company
C. Majority of the partners should 104. The board of directors shall

be practicing in India appoint first auditor of a
D. All partners should be chartered company

accountants A. Within one month of completion
Answer: C.Majority of the partners of capital subscription state of
should be practicing in India the
103. As per the requirements of company

section 226(3) and 226(4) a
B. Within one month of the 106. In case the directions fail to

promotion of the company appoint first auditor (s), the
C. Within one month of the shareholders shall appoint them

commencement of the business at…..by passing a resolution
of the A. a general meeting
company B. first annual general meeting
D. Within one month of C. statutory meeting
incorporation of the company
D. annual general meeting
Answer: D.Within one month of
Answer: A.a general meeting
incorporation of the company
105. The term of the auditor ship of
statement is not true regarding
first auditor would be from
appointment of statutory auditor by
the date of appointment till__
the Central Government?
A. the conclusion of statutory
A. Such powers have been
meeting
conferred upon it by section
B. the conclusion of first annual 224(3)
general meeting
B. If a company fails to appoint an
C. the conclusion of next annual auditor at a general meeting
general meeting
C. If an auditor refuses to accept
D. the date of removal appointment, the powers of the
Answer: B.the conclusion of first Central
annual general meeting
D. None of the above B. Auditor’s report
Answer: B.If a company fails to C. Acceptance of audit

appoint an auditor at a general D. Starting of audit work
meeting Answer: C.Acceptance of audit
108. If a casual vacancy in the office 110. Which of the following is
of auditor arises by his counted for the purposes of
resignation it should only be filled section
by the company in a…….. 224(IB) the number of partners of a
A. Board meeting firm which shall be taken into
B. Extraordinary general meeting account would be as on the data of

___
C. General meeting
A. Joint audit
D. Annual general meeting
B. Audit to non-profit companies
Answer: C.General meeting
C. Audit of unlimited companies
109. For the purposes of section
224(IB) the number of partners D. All of the above
of Answer: D.All of the above
a firm which shall betaken into 111. Mr. A, a Charted Accountant,
account would be as on the date has nineteen audits, Out of
of
following audits which audits
_ should he accept to ensure he
A. Completion of audit doesn’t violate provisions of section
224(IB) __ 113. The auditor of a Government

company is appointed by the C
A. Audit of a private company
& AG. His remunerationis fixed
B. Audit of branch of a foreign
by__
company
A. The C & AG
C. Audit of two branches of an
Indian company B. The shareholders
D. All of them C. The shareholders at an annual

general meeting
Answer: D.All of them
D. The board of directors
112. Which audit out of the
following would not be regarded Answer: B.The shareholders
as 114. The section which contains
one audit for the purposesof section provisions regarding
224(IB)? remuneration of the auditor is_
A. Audit of one branch each of two A. Section 224(9)
different companies
B. Section 224(7)
B. Joint audit
C. Section 224(8)
C. Audit head office & branches
D. Section 224(6)
D. Audit of one or more branches of
Answer: C.Section 224(8)
a company
115. The authority to remove the
Answer: A.Audit of one branch
first auditor before the expiry of
each of two different companies
term is with_ D. The provisions for such removal

are contained in section 224(7)
A. The shareholders in a general
meeting Answer: C.The approval of the
Central Government is required
B. The shareholders in the first
for
annual General meeting
such removal
C. The board of directors
117. The retiring auditor does not
D. the Central Government
have a right to___
Answer: A.The shareholders in a
A. make written representations
general meeting
B. get his representations
circulated.
statements is not correct
regarding C. be heard at the meeting
removal of first auditor before D. speak as a member of the

expiry of the term? company
A. He is removed at a general Answer: D.speak as a member of

meeting the company
B. The shareholders are authorized 118. Who out of the following

to do so cannot be appointed as a
statutory
C. The approval of the Central
Government is required for such auditor of the company?
removal A. Erstwhile director

B. Internal auditor and
C. Relative of a director officers
D. Only (b) and (c) C. Obtain information and

explanation necessary for the
Answer: B.Internal auditor
purpose of
119. A statutory auditor has a right
audit
of access at all times to
D. Both (b) and (c)
A. Books and accounts of a
company Answer: D.Both (b) and (c)
B. Books, accounts and documents 121. The principal auditor, as per

of the company clarification issued by the ICAI,
C. Books, accounts and vouchers of does not have any right to

the company A. Inspect working papers of the
D. Notices and documents of the branch auditor
company B. Visit branches
Answer: C.Books, accounts and C. Seek information necessary for
vouchers of the company audit purposes
120. The auditor has a right to D. Incorporate the branch audit
A. Obtain information and report in his audit report
explanation Answer: A.Inspect working papers
B. Obtain information and of the branch auditor
explanation from the employees 122. Under which of the following
section auditor has a duty to 124. Right to visit branches has

been given to the auditor under
enquire into six specified matters
and report by exception? which section?
A. Section 227(4A) A. Section 222(3)
B. Section 227 (IA) B. Section 228(2)
C. Section 227 (2) C. Section 228(4)
D. Section 227(3) D. Section 228(3)
Answer: A.Section 227(4A) Answer: D.Section 228(3)
123. The auditor has to enquire, 125. Which of the following

under section 227 (IA) into statements with regard to rules
different aspects, related to shares regarding exemption from branch

allotted for cash for the audit is not true?
purpose of auditor include A. A branch office of a company can

be granted exemption on the
A. Shares against whose allotment
cash has actually been received basis
of quantum of activity criterion

B. Shares allotted for consideration
other than cash B. If a satisfactory arrangement of
scrutiny check of the books of
C. Shares allotted against a debt
payable account of a branch office of a
manufacturing company has
D. All of them
been
Answer: D.All of them
made, it can be exempted from general meeting

branch audit B. Shareholders in general meeting
C. Cost consideration should be C. Board of directors in board
considered as an important meeting
factor/
D. Any of the above
ground for exemption from branch
Answer: B.Shareholders in general
audit
meeting
D. The auditor should state in his
127. Special audit is conducted at
audit report that branch office is
the order of the Central
exempted by virtue of quantum of
Government. Which section gives
activity or any other basis
such powers?
Answer: B.If a satisfactory
A. Section 233(A)
arrangement of scrutiny check
of the books B. Section 233A
of account of a branch office of a C. Section 242(A)

manufacturing company has D. Section 242A
been
Answer: C.Section 242(A)
made, it can be exempted from
128. Who among the following can
branch audit
be appointed as special auditor
126. The branch auditor is
by the Central Government?
appointed by –
A. The statutory auditor
A. Shareholders in an annual
B. chartered accountant in practice should mention this fact in his

audit
C. Any chartered accounted who is
not in practice report. For this purpose, how does
hedetermine their eligibility :
D. Both (a) and (b)
A. He obtains a representation from
Answer: D.Both (a) and (b)
each director
129. The scope of the audit
B. He obtains a management
including reference to the
representation
pronouncements of the ICAI, which
C. He enquiries from Registrar of
the auditor adheres to,
Companies
generally is communicated to the
D. Any one of the above
client in the ____ i) auditor’s
Answer: A.He obtains a
report ii) engagement letter iii)
representation from each
representation letter
director
A. i) only
131. As per the ‘Statement on
B. Both (i) and (ii)
Qualification in Auditor’s
C. Both (i) and (iii) Report’s
D. All the above issued by theICAI, the auditor,
Answer: B.Both (i) and (ii) Under section 227(3) has to gave
a
130. If any director is disqualified
from being appointed under statement of fact on_
section 274(1) (g), the auditor A. Proper books of account

B. Accounting standards auditor to
C. Cess payable under section 441A give his report to the members of
the company on certain matters.
D. None of the above
Which of the following is not
Answer: C.Cess payable under
included in the above?
section 441A
132. The date on auditor’s report A. Accounts examined by him

should not be__ B. Every balance sheet and profit
and loss account laid before a
A. The data of AGM
general meeting during his tenure
B. Later than the date on which the
accounts are approved in C. Every document that is a part of
board’s or ‘annexed to’ the balance sheet
meeting D. Every document which is

attached to the profit and loss
C. Earlier than the date on which
account
the accounts are approved by the
Answer: D.Every document which
management
is attached to the profit and loss
D. Both (a) and (b)
account
Answer: C.Earlier than the date on
134. When restrictions that
which the accounts are approved
significantly affect the scope of
by the management
the
133. Section 227(2) of the
audit are imposed bythe client, the
Companies Act, requires the
auditor generally should issue
which of the following opinion? one per cent of all assets. The
A. Qualified opinion client hasimposed restriction on

auditor to prohibit observation
B. Disclaimer of opinion
of stock take. The auditor cannot
C. Adverse opinion
apply alternate audit
D. Unqualified report with ‘an
procedures.
emphasis of matter’ paragraph;
A. Unqualified opinion
Answer: A.Qualified opinion
B. Qualified opinion
135. Which of the following report
not result in qualification of C. Disclaimer of opinion
the auditor’s opinion due to a scope D. Adverse opinion

limitation? Answer: C.Disclaimer of opinion
A. Restrictions the client imposed 137. The auditor has serious
B. Reliance on the report of other concern about the going concern
auditor of
C. Inability to obtain sufficient the company. It is dependent on

appropriate evidential matter company’s obtaining a working
D. Inadequacy of accounting capital loan from a bank which has

records been applied for. Then
Answer: B.Reliance on the report of management of the company has

other auditor made full disclosure of these
136. The inventory consists of about facts in the notes to the balance
sheet. The auditor is satisfied Answer: B.These are given to

adhere to requirements of
with the level of disclosure. He
section 211.
should issue_
139. The client changed method of
depreciation from straight line
B. Unqualified opinion with
to written down value method. This
reference to notes to the
has been disclosed as a note to
accounts
the financial statements. It has an
C. Qualified opinion
immaterial effect on the
D. Disclaimer of opinion
current financial statements. It is
Answer: B.Unqualified opinion with
expected, however, that the
reference to notes to the
change will have a significant effect
accounts
on future periods. Which of
138. Which of the following is true
the following option should the
about explanatory notes?
auditor express?
A. These are given by the directors
of the company
B. These are given to adhere to
requirements of section 211. C. Disclaimer of opinion
C. These are given by auditors of D. Adverse opinion

the company in auditor’s report Answer: A.Unqualified opinion
D. All of the above 140. Which of the following is not
true regarding requirements director, as to whether such

company has defaulted in terms
under section 227(3) (f) of the
of
Companies Act, 1956?
provisions of sections 274(1) (g)
A. The auditor has to satisfy himself
whether any of the directors of D. The disqualification should be
the considered on the date of audit
company, whether public or report.

private, are disqualified from Answer: D.The disqualification
being should be considered on the date
appointed as directors as per of
section 274(1) (g). audit report.
B. Section 274(1) (g) is applicable to 141. The management of a
appointment of directors both in company, to which AS3 is not
public and private companies but applicable, does not include
reporting is limited to only those statement of cash flows in its
directors of a company who are also annual
directors of a public company report. The auditor should express
C. The auditor requires every A. Unqualified opinion
director to submit a written
representation in respect of each
C. Adverse opinion
Public company, of which the is
a D. Any of these depending upon
materiality and pervasiveness A. Issue a standard unqualified

and audit report
adequacy of disclosure B. Issue a qualified report
Answer: A.Unqualified opinion C. Issue an unqualified report with

‘emphasis of matter’ paragraph
142. In case the auditor gives a
disclaimer of opinion in the audit D. Disclaim opinion
report which of the following Answer: B.Issue a qualified report

paragraph(s) of a standard 144. The auditor should state the
unqualified audit report are reasons for his reservations in
modified? audit report and should try to
A. Scope paragraph quantify the effect on them. This
B. Opinion paragraph should be done in case he has

expressed _ i) A qualified opinion
C. Scope and opinion paragraphs
ii)
D. Introductory, scope and opinion
an unqualified opinion with
paragraph
emphasis of matter paragraph
Answer: C.Scope and opinion
iii) An
paragraphs
adverse opinion IV) a disclaimer of
143. A departure from recognized
opinion
accounting principle is disclosed
A. i) only
in a note to the financial statements.
B. i) and (iv) only
The auditor should
C. i), iii) and (iv) only C. Recomputed accrued income on

the data of balance sheet
D. All of the above
D. Any of these
Answer: A.i) only
Answer: A.Identify cases of
unrecorded revenue
documents is not relevant for
147. To test whether sales have been
vouching cash sales?
recorded, the auditor should
A. Daily cash sales summary
draw a sample from a file of
B. Salesmen’s summary
A. Purchase orders
C. Monthly statements sent to
B. Sales orders
customers
C. Sales invoices
D. Bank statement
D. Bill of loading
Answer: C.Monthly statements sent
to customers Answer: C.Sales invoices
146. The auditor should examine 148. For vouching of which item,
subsequent realization of the auditor is most likely to
revenue such as dividends, interest, examine cost records?

commission, etc to A. Commission earned
A. Identify cases of unrecorded B. Bad debts recorded
revenue
C. Credit sales
B. Ensure proper disclosure in the
D. Sale of scrap
balance sheet
Answer: D.Sale of scrap C. To test procedures for

distributing pay cheques
149. The “Guidance Note on
Revenue” issued by the ICAI D. To obtain understanding of
does not internal control system
deal with Answer: C.To test procedures for

distributing pay cheques
A. Sales revenue
151. Which of the following would
B. Revenue rendering service
prevent double payment of the
C. Revenue from sale of fixed assets
same voucher?
D. Income from interest, dividend
A. The person signing the cheque
Answer: C.Revenue from sale of
should cancel the supporting
fixed assets
documents
150. An auditor conducts a surprise
B. Cheques should be signed by at
check on the pay day (i.e) the
best two persons
day wages and salaries are paid.
C. The data of payment of vouchers
The primary purpose of this
of similar nature should be the
audit procedure is
same or close to each other
A. To ensure that there are no ghost
D. All of the above
workers
Answer: A.The person signing the
B. To ensure the casual workers
cheque should cancel the
employed are authorized by the
supporting
supervisor
documents rates
152. In case of unclaimed wages, the B. Proposing pay roll summary and
auditor should examine disbursement of wages
whether C. Making salary statements and

filing tax returns
A. The amount has been deposited
in a separate bank account D. Comparing time clock records
with time reports prepared by
B. Deposited with the cashier
supervisors and preparing list of
C. Held in a safe deposit box
workers employed along with
D. All of these
the
Answer: A.The amount has been
units of production for each one of
deposited in a separate bank
them
account
Answer: B.Proposing pay roll
153. While vouching wages, auditor
summary and disbursement of
should examine whether there
wages
is proper segregation of duties.
154. In order to vouch, which of the
Which of the following activities
expenses, the auditor will
should not be done by same
examine Bill of Entry?
department?
A. Custom
A. Maintaining personnel records
and approving changing in B. Excise duties
wages C. Sales tax
D. Income tax inward return notes
Answer: A.Custom C. Purchase invoices, advice notes

and inward return notes
155. While vouching, how will the
auditor ensure himself that all D. Credit notes, inspection report
and inward return notes
credit salestransactions have been
recorded by the entity? Answer: D.Credit notes, inspection
report and inward return notes
A. Examining cut-off points
157. An internal auditor discovered
B. Matching entries in the sales
that fictitious purchases have
book against renumbered sales
been recorded by the purchase
invoices and goods outward notes
clerk. This indicates absence of
C. Counting the number of invoices
which control?
and matching the number with
A. Purchase invoices are
entries on sales book
independently matched with
D. Both (a) and (b)
purchase orders
Answer: D.Both (a) and (b)
and goods received notes
156. In case of sales return, the
B. Goods received notes requires
auditor should examine which
the signature of individual who
documents?
authorized the purchase
A. Credit notes, advice notes and
C. Routine checks are performed by
inward return notes
internal auditor fortnightly.
B. Debit notes, advice notes and
D. Purchase function and vouching

production function are clubbed A. Credit sales
in one
B. Sales returns
department
C. Credit purchases
Answer: A.Purchase invoices are
D. Cash purchases
independently matched with
Answer: C.Credit purchases
purchase orders and goods received
notes 160. In order to vouch bought
ledger, the auditor obtain
158. Which of the following is most
crucial to a purchase confirmations from creditors. The
principal reason for the auditor
department?
to examine suppliers statements at
A. Reducing the cost of acquisition
balance sheet date is to obtain
B. Selecting supplies
evidence that
C. Authorizing the acquisition of
A. The supplier exist
goods
B. There are no unrecorded
D. Assuring the quality of goods
liabilities
Answer: C.Authorizing the
C. Recorded purchases actually
acquisition of goods
occurred
159. The auditor is most likely to
D. To link creditors with cash book
examine related party
entries
transactions very carefully while
Answer: B.There are no unrecorded
liabilities policy
161. The creditor’s accounts, 163. Vendors should be approved by

generally, have credit balance. Management before
Debit purchase department executes an
balance may be due to order. If this is not done, then
A. Advance paid against an order which of the following situations

may arise?
B. Goods returned
A. Purchases could be made from
C. Wrong debit to supplier account
vendors whose product quality
D. Any of these
may
Answer: D.Any of these
not be good
162. In case of vouching, the auditor
B. Purchases may be made from
is least likely to examine
related parties without
authorization by appropriate management’s
authority in case of –
knowledge
A. Bad debts written off
C. Purchases could be made from
B. Sales return vendors who may have offered
C. Purchase return price
D. Discount allowed to customers as to manager purchases
per organizational policy D. Any of these
Answer: D.Discount allowed to Answer: D.Any of these

customers as per organizational
164. Which of the following is not C. The auditor should value the
true with regard to verification asset as per generally accepted
of assets? accounting principle
A. It invoices substantiation of D. Valuation is no part of auditor’s

occurrence of transactions duty
B. Its objective is to establish Answer: C.The auditor should

existence, ownership, possession, value the asset as per generally
accepted
valuation and disclosure of assets
accounting principle
C. The auditor has to form an
opinion on different aspects 166. An auditor is verifying
valuation of building which has
D. All are true
been
Answer: A.It invoices substantiation
self constructed by the client.
of occurrence of transactions
Which of the following
documents is
statements is not true?
least relevant to the auditor for
A. Valuation of assets is the
verification purposes?
responsibility of management
A. Bills of contractor
B. The auditor can rely on a
B. Minutes of meeting of board of
certificate issued by an
directors
authorized
C. Certificates of engineer and
valuationer as to the valuation of
architect
assets in the balance sheet
D. Loan agreement C. Examination of debits to

accumulated depreciation
Answer: B.Minutes of meeting of
board of directors D. All of the above
167. Which of the following assets is Answer: D.All of the above

least likely to be subjected to 169. The auditor has noticed
lien? existence of recurring losses sale
of
A. Freehold land
fixed assets this indicates
B. Plant and machinery
A. Depreciation charges are
C. Leasehold property
insufficient
D. Motor vehicles
B. Policy of sale or disposal of fixed
Answer: C.Leasehold property
assets needs to be reviewed
168. An analysis of fixed assets
C. The sale of assets have not been
account has revealed possibility
properly authorized
of
D. Accounting errors
unrecorded sale of plant and
Answer: A.Depreciation charges are
machinery. Which of the
insufficient
following
audit procedures may be adopted to
financial statements assertions
discover it?
are
A. Examination of property tax files
addressed by testing the cut off for
B. Inquiry of plant manager
plant asset addition?
A. Existence and ownership The auditor tries to establish
B. Valuation and disclosure ….by doing it
C. Possession and ownership A. Valuation
D. Completeness and valuation B. Existence
Answer: D.Completeness and C. Disclosure

valuation D. Possession
171. The auditor while verifying Answer: A.Valuation
prepaid insurance has concluded
173. When auditing prepaid
that there is inadequate insurance insurance, an auditor discovers
of building, He should__ that
A. Modify his audit report the insurance policy bond on
B. Insist it should be disclosed in the building is not available for
notes to financial statements inspection. This may indicate__
C. Write it in letter of weakness A. No insurance has been
D. Both (b) and (c) undertaken for building
Answer: D.Both (b) and (c) B. Lien on building
172. While verifying intangible C. Insurance premium has not been

assets, an auditor would paid
recomputed amortization charges D. Insurance premium paid but not

and determines whether recorded
amortization period is reasonable. Answer: B.Lien on building

174. Which of the following controls document

would ensure that securities D. Both (a) and (b)
are not lost,stolen or diverted? Answer: D.Both (a) and (b)
A. Establish physical barriers over 176. Tests of control are not
investment securities concerned with_
B. Maintain files of authorized A. Existence of controls
signatures
B. Effectiveness of controls
C. Segregate investment approval
C. Continuity of controls
from accounting and from
custody of D. Designing of controls
securities Answer: D.Designing of controls
D. All of the above 177. The sequence of steps in the

auditor’s consideration of
Answer: D.All of the above
internal control is as follows –
175. Which of the following would
give the assurance that debtors A. Obtain an understanding, design
substantive test, perform tests of
mentioned on the date of balance
sheet actually exist? control, and make a preliminary
assessment of control risk
A. Sending debtor’s confirmation
letters B. Design substantive tests, obtain
an understanding, perform tests
B. Reviewing subsequent collection
of
C. Verify debtors against sales
control, and make a preliminary
assessment of control risk D. Abuse of authority
C. Obtain an understanding, make Answer: C.Inefficiency of internal

a preliminary assessment of auditor
control 179. An auditor should study and
risk, perform tests of control, design evaluate internal controls to
substantive procedures. A. Determine whether assets are
D. Perform tests of control, obtain safeguarded
and understanding, make a B. Suggest improvements in
preliminary assessment of control internal control
risk, design C. Plan audit procedures
Answer: C.Obtain an D. Express and opinion
understanding, make a
Answer: C.Plan audit procedures
preliminary assessment
180. The primary purpose of
of control risk, perform tests of
performing tests of control is to
control, design substantive
procedures. provide reasonable assurance that_
178. Which of the following is not A. There are no material

an inherent limitation of misstatements due to fraud or
error in
internal control system?
financial statement
A. Management override
B. Accounting system is well
B. Collusion among employees
documented
C. Inefficiency of internal auditor
C. Written evidence is there to C. Control procedures

support transactions D. Supervision
D. if internal control is effective Answer: B.Control environment
Answer: D.if internal control is 183. Which of the following are
effective included in test of control?
181. If the auditor assesses control A. Reperformance and observation
risk as high….
B. Inquiry and analytical
A. Document the conclusions procedures
B. Documents the reasons along C. Comparison and conformation
with conclusions
D. Inspection and verification
C. Perform tests of control
Answer: A. Reperformance and
D. Perform walk through tests observation
Answer: A.Document the 184. Control risk is assessed at
conclusions
A. Overall financial statements level
182. The overall attitude and
B. Fraud risk factor level
awareness of an entity’s board of
C. Financial statement assertion
directors concerning the
level
importance of internal control is
D. Control environment level
reflected in
Answer: C.Financial statement
A. Accounting controls
assertion level
B. Control environment
185. An auditor assesses control risk D. Both (a) and (c)

because it Answer: A.Understanding of the
A. Affects the audit risk system
B. Affects the level of detection risk 187. The performance of tests of

that auditor may accept control is documented in
C. Helps him to fix materiality level A. Audit programme

for each financial assertion B. Flow charts
D. Is directly related to inherent C. Working papers
risk
D. Any of the above
Answer: B.Affects the level of
Answer: C.Working papers
detection risk that auditor may
accept 188. The independence of an
internal auditor will most likely
186. A flow chart, made by the
be
auditor, of an entity’s internal
assured if he reports to the
control system is a graphic
representation that depicts the A. President Finance
auditor’s. B. President System
A. Understanding of the system C. Managing Director
B. Understanding of fraud risk D. CEO

factors Answer: C.Managing Director
C. Documentation of assessment of 189. In comparison to the
control risk
independent auditor, an internal 191. Proper segregation of duties

reduces the opportunities in
auditor is more likely to be
concerned with which a person would both
A. Cost accounting system A. Establish controls and executes

them
B. Internal control system
B. Records cash receipts and cash
C. Legal compliance
payments
D. Accounting system
C. Perpetuate errors and frauds
Answer: B.Internal control system
and conceals them
190. When an independent auditor
D. Record the transaction in
relies on the work of an
journal and ledger
internal auditor, he or she should
Answer: C.Perpetuate errors and
A. Examine the scope of internal frauds and conceals them
auditor’s work
192. Analytical procedures are least
B. Examine the system of likely to be use in the audit of
supervising review and
–
documentation of
A. Cash balance
internal auditor’s work
B. Investments
C. Adequacy of related audit
C. Bills receivables
programme
D. Debtors
D. all of the above
Answer: A.Cash balance
Answer: D.all of the above
193. Which of the following 194. The balance of cash in often

statements is not true with between one to five percent of
regard to total assets. Tickthe most
teeming and lading ? appropriate statement with
regard to
A. It results in the deliberate
misappropriation of cash verification of cash in context of this
receipts A. Cash in always material as
B. It is associated with cash receipts materiality is qualitative concept
C. If same individual maintains B. No audit of cash is needed when,

cash receipts and cash payments in auditor’s opinion, cash is
teeming and lading is likely to exist immaterial. Materiality is a relative

concept
D. To conceal the shortage, the
defraud, usually, tries to keep C. The cash balance need only be
bank and audited if the balance is in
overdraft
book amounts in daily agreement so
that a bank reconciliation will D. Cash is to be verified if control
not risk is assessed as high
detect the irregularity. Answer: A.Cash in always material

as materiality is qualitative
Answer: C.If same individual
maintains cash receipts and cash concept
payments teeming and lading is 195. When counting cash on hand

likely to exist the auditor should ___
A. Ensure presence of somebody material

from management B. Auditor may not attend physical
B. Obtain a receipt from custodian verification of stock by
as to its return management, if he does not find it
C. Ensure postage and revenue appropriate to rely on it
stamps are not counted in C. If inventory is material, even
physical when the auditor is not placing
count reliance on the physical verification
D. Temporary advances to by the management, he should
employees are counted to attend it
calculate balance
D. The primary objective of an
of cash in hand auditor’s observation of an
Answer: C.Ensure postage and entity’s
revenue stamps are not counted observation of an entity’s stock take
in is to obtain direct knowledge
physical count that
196. Which of the following the stock and has been property
statement is not true regard to counted
auditor’s attendance at stock Answer: C.If inventory is material,

taking? even when the auditor is not
A. Auditor should attend physical placing reliance on the physical

stock taking only if inventory is verification by the management,
he D. Sales book and purchase return

book
should attend it
Answer: B.Purchase book and sales
197. While observing a client’s
return book
annual physical inventory, an
199. ……………….. Starts where
auditor conducted tescounts for
…………….. Ends
certain test counts were higher
A. Accounting, auditing
than the recorded quantities in the
client’s perpetual records. B. Auditing, accounting
This situation could be the result of C. Vouching, auditing

the client’s failure to record – D. Accounting,vouching
A. Purchase returns Answer: B.Auditing, accounting
B. Sales returns 200. ………… means “proving the
C. Goods with consignor truth or confirmation”
D. Purchase discounts A. Vouching
Answer: B.Sales returns B. Verification
198. Inspection report/receiving C. Inspection

report supports entries in D. Auditing
A. Sales book and sales return book Answer: B.Verification
B. Purchase book and sales return 201. Civil liability of an auditor
book implies liability for
C. Cash book and purchase book
A. misappropriation of cash
B. misappropriation of goods

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Science Journal of Business and Management

2022; X(X): XX-XX

3. The most comprehensive type of

A. internal A. the client, the auditor, and the

D. the client, the auditor, and the following:

7. The time required and costs B. client

8. Audit is a fact-finding process only report non-conformances and

…………………. not highlight areas of good practice.

A. specified standards and plans A. True

B. expected results B. False

C. premature results Answer: B

D. preliminary results AUDITING MCQs

Answer: A 11. Who among the following can be

C. Mr. Y who owes Rs. 500 to the accounts examined by him

account either wholly or partially is known as vouching of ______.

18. Verification of the value of A. fictitious asset.

C. Balance sheet audit. Answer: B

D. Income statement audit. 24. One of the audit procedures to

D. to check the bank balance. Answer: B

26. The owners of the company are Answer: D

D. None of the above. C. Civil and Criminal.

27. The main objects of Answer: C

B. to prevent errors and frauds. A. Cost accountant.

C. to verify statements. B. Chartered accountant.

D. all the above C. ICWA

Answer: D D. need not possess any professional

A. at par. 31. A vacancy caused by resignation

B. managing director. C. the managing director of the

C. not necessarily honest. entity should ______________.

D. dishonest unless proved A. engage experts.

36. The use of an audit engagement business.

purpose. D. All of the above.

D. Co-operation from other Answer: D

industry expertise of the business B. Continuous audit.

C. Detailed audit. should not be considered?

D. Statutory audit. A. Prior years errors.

Answer: A B. The auditor remuneration.

40. Balance sheet audit included C. Adjusted interim financial

A. assets D. Prior year financial statements.

C. income and expenditure 43. Which of the following

42. In determining the level of D. It helps to accumulate evidence

account balance Answer: B

Answer: D 46. Audit Programme is prepared

evidence? B. the client.

A. Bank statements obtained from C. the audit assistants.

B. To provide a basis for subsequent ___________.

D. To provide a guide for advising company

49. Which of the following sections C. within one month of the

C. Section 226(3) and Section 51. In case the directions fail to

shareholders shall appoint them at removal of first auditor before

A. a general meeting. A. He is removed at a general

does not have right to visit A. four years.

foreign branches of the company. B. five years.

A. unlimited liability. C. six years.

B. manufacturing D. seven years.

D. non-profit making. 58. Audit of transactions does not

A. Section 233(A.. D. audit of expenditure.

B. section 233(B. Answer: B

C. section 242(A. 59. Audit of rent, deposits and

Auditor General is ______ a. four C. audit of sanctions

Answer: C B. Market price

60. The statutory auditor of a C. Cost or market price whichever

B. the C & AG. 63. Goods sold on the basis of ‘sales