513C - Principles of Auditing

Dr.G.R.
Damodaran College of Science

(Autonomous, affiliated to the Bharathiar University, recognized by the UGC)Re-
accredited at the 'A' Grade Level by the NAAC and ISO 9001:2008 Certified
CRISL rated 'A' (TN) for MBA and MIB Programmes
III B.COM (A.M)[2012-2015]
semester V
Core:Principles of Auditing -513C
Multiple Choice Questions.
1. __________ is a systematic examination of the books and records or a business.
A. Auditing.
B. Vouching.
C. Verification.
D. Checking.
ANSWER: A
2. Which of the following are not objectives of auditing?
A. Ascertain the profit and preparation of P/L Account, Balance sheet.
B. Detection and prevention of frauds and errors.
C. Give a true and fair view of financial amount.
D. To submits the accounts to Government of India.
ANSWER: D
3. Which of the following is not a kind of audit?
A. Statutory and private audit.
B. Government and continuous audit.
C. Continuous, final, Interim, Cash, Cost and Management audit.
D. None of these.
ANSWER: D
4. An audit which is compulsory by the law __________.
A. Government audit.
B. Internal audit.
C. Cost audit.
D. Statutory audit.
ANSWER: D
5. Instruction of audit issued by controller and auditor general of India ________.
A. statutory audit.
B. final audit.
C. management audit.
D. government audit.
ANSWER: D
http://172.16.2.20/printqp.php?heading=III B.COM (A.M)[2012-2015],...
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6. Audit done by the employees of the business undertaking is called _______.
A. final audit.
B. management audit.
C. government audit.
D. government audit.
ANSWER: B
7. This kind of audit is conducted generally between two annual audit ______.
A. internal audit.
B. interim audit.
C. final audit.
D. continuous audit.
ANSWER: B
8. Management audit otherwise called as _______.
A. final audit.
B. efficiency audit.
C. cost audit.
D. cash audit.
ANSWER: B
9. Before the work of audit is commenced, the auditor plans out the whole of audit work is called
_________.
A. Audit plan.
B. Audit note.
C. Audit programme.
D. Audit programme.
ANSWER: D
10. A number of checks and 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.
ANSWER: B
11. A Voucher is a _______.
A. document is support of an entry made in books of accounts.
B. invoice received from suppliers.
C. receipt issued to a customer for cash.
D. despatch receipt.
ANSWER: A
12. Voucher relates to _________.
A. cash receipt.
B. cash payment.
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C. credit transactions.
D. all the above.
ANSWER: D
13. Internal check is meant for ___________.
A. prevention of frauds.
B. detection of frauds.
C. helping audit is depth.
D. detection of errors.
ANSWER: A
14. Internal auditor is appointed by ________.
A. the management.
B. the shareholders
C. the government.
D. he statutory body.
ANSWER: A
15. Auditing begins where ______ ends.
A. Selling.
B. inventory valuation.
C. Accounting.
D. Purchases.
ANSWER: C
16. A kind of audit conducted for a part of the accounting year is called _______.
A. Periodical audit.
B. Partial audit.
C. Cost audit.
D. Interim audit.
ANSWER: A
17. For which of the following, Audit is optional?
A. Trusts.
B. Joint stock companies.
C. Proprietorship concern.
D. None of the above.
ANSWER: C
18. Providing more or less depreciation on assets is an example of ______.
A. Misappropriation of cash.
B. Misappropriation of goods.
C. Misappropriation of accounts.
ANSWER: D
19. The audit that is made compulsory under statute is called _________.
A. Statutory audit.
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B. Partial audit.
C. Complete audit.
D. Continuous audit.
ANSWER: A
20. The receipt of goods must be entered in _________.
A. goods inward book.
B. goods outward book
C. receipt of Stores.
D. ceipt issue and balance of stores
ANSWER: A
21. Who among the following can be appointed as auditor of a company?
A. A partner or a director of the company.
B. A person of unsound mind.
C. Mr. Y who owes Rs. 500 to the company.
D. Mr. Z the holder of C.A certificate.
ANSWER: D
22. Auditing standards differ from auditing procedures in that procedures relate to ________.
A. Measure of performance.
B. Audit principles.
C. Acts to be performed.
D. Audit judgments.
ANSWER: C
23. Confirmation of the court is necessary for __________.
A. increasing the share capital.
B. . reduction of share capital.
C. conversion of shares into stock.
D. issue of new shares.
ANSWER: B
24. Profit prior to incorporation may be utilized to ___________.
A. write of goodwill
B. pay interest on purchase consideration
C. writing off fixed assets.
D. all the above.
ANSWER: A
25. Which of the following is not true about opinion on financial statements?
A. The auditor should express an opinion on financial statements.
B. His opinion is no guarantee to future viability of business.
C. He is responsible for detection and prevention of frauds and errors in financial statements.
D. He should examine whether recognized accounting principles have been consistently.
ANSWER: A
26. Audit means ___________.
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A. recording business transactions.
B. preparing the final accounts.
C. examination of books, accounts, vouchers etc.
D. preparing final accounts.
ANSWER: C
27. Audit programme is prepared ______________.
A. to help the auditor and his staff about the work to be done while auditing.
B. to help the accountant to prepare the balance sheet.
C. to help the company to submit its accounts.
D. to help the shareholders to file the returns.
ANSWER: A
28. Audit is ________.
A. a member of the company.
B. the agent of the members of the company
C. the agent of the central government.
D. an assistant to accountant.
ANSWER: B
29. Auditor shall report on the accounts examined by him __________.
A. to the shareholders.
B. to the court.
C. to the bank.
D. to the general public.
ANSWER: A
30. Purchase of machinery is a ____________.
A. revenue receipt.
B. capital receipt.
C. capital expenditure.
D. revenue expenditure.
ANSWER: C
31. Sale of land is a __________.
A. revenue receipt.
B. capital receipt.
C. capital expenditure.
D. revenue expenditure.
ANSWER: B
32. Shares are forfeited on the non-payment of ____________.
A. share calls amount.
B. calls in advance.
C. minimum share capital.
D. debenture amount.
ANSWER: A
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33. Prospectus is a document _________.
A. containing the rules and regulations of the company.
B. containing details about the manufacturing process of the company.
C. containing details about the share capital of the company.
D. containing the information of the sales.
ANSWER: C
34. Secret reserve can be created by _______________.
A. public limited company only.
B. banking and financial companies only.
C. private limited company only.
D. co-operative societies
ANSWER: B
35. General reserve is __________.
A. an appropriation from the profit.
B. a must item in the debit side of the P&L account.
C. an appropriation from the share capital.
D. important item in the balance sheet.
ANSWER: A
36. When a transaction has not been recorded in the books of account either wholly or partially such errors
are called as _________.
A. Error of commission.
B. Error of omission.
C. Compensating error.
D. Error of principle.
ANSWER: B
37. Verification of the value of assets, liabilities, the balance of reserves, provision and the amount of profit
earned or loss suffered a firm is called _________.
A. Continuous audit.
B. Balance sheet audit.
C. Interim audit.
D. Partial audit.
ANSWER: B
38. Alterations and heavy repairs to plant etc., is _____________.
A. Deferred revenue expenditure.
B. Capital expenditure.
C. Revenue expenditure.
D. Petty expenses.
ANSWER: C
39. A sale of Rs. 50000 to Mr. A was entered as a sale to Mr. B. This is an example of:
A. Error of omission.
B. Error of commission.
C. Compensating error.
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D. Error of principle.
ANSWER: B
40. Recording a transaction twice in the books of original entry is an error of __________.
A. Principle.
B. Commission.
C. Duplication.
D. Omission.
ANSWER: C
41. Errors and frauds already committed can be discovered under the system of ________.
A. Internal audit.
B. Internal check.
C. Internal control.
D. All of the above.
ANSWER: D
42. Treating revenue expenditure as capital expenditure is a case of _________.
A. fraud
B. misappropriation of cash.
C. misappropriation of goods.
D. manipulation of accounts.
ANSWER: D
43. Vouching of the balances of all incomes and expenses account is known as vouching of ______.
A. Personal ledger.
B. Impersonal ledger.
C. Cash.
D. Sales.
ANSWER: B
44. Stock in trade is valued _________.
A. at cost price.
B. at market price.
C. at cost price or market price whichever is less.
D. at cost price less depreciation.
ANSWER: B
45. Goods sent on approval basis have been recorded as credit sales. This is an example of:
A. Error of principle.
B. Error of commission.
C. Error of omission.
D. Error of duplication.
ANSWER: A
46. Preliminary expenses are the best example for _________.
A. fictitious asset.
B. intangible asset.
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C. wasting asset.
D. floating asset.
ANSWER: A
47. The profits that can be legally distributed to shareholders are called _________.
A. Revenue profits.
B. Capital profits.
C. Divisible profits.
D. Profits prior to incorporation.
ANSWER: C
48. Errors of principle are due to ___________.
A. Wrong entry of the transaction in the books of original entry.
B. Wrong allocation of expenditure between capital and revenue.
C. Mistake in the payment of commission.
D. Mistake in the payment of salary.
ANSWER: A
49. Periodical audit is also called as _________.
A. Final audit.
B. Interim audit.
C. Balance sheet audit.
D. Income statement audit.
ANSWER: C
50. An audit programme is ___________.
A. a description, memorandum or an outline of the work to be done in a business.
B. the rules and regulations prescribed for writing up the books of accounts.
C. to gain knowledge of clients accounting system.
D. a trial work.
ANSWER: B
51. The auditor of a government company shall be appointed by ________.
A. the government company itself.
B. the central government.
C. the share holders.
D. the debenture holders.
ANSWER: B
52. An auditor of a company will be held liable under the companies act _________.
A. if the destroys, mutilates, secrets etc., any documents, vouchers, books etc., with a view to deceive
any person.
B. if he has examined all the documents of the company.
C. if he has not contravened the provisions of sec.227.
D. if he is an auditor of the company.
ANSWER: A
53. The main object of the audit of the cash book may be ________.
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A. to verify the assets and liabilities.
B. to know that all receipts and payments have been properly recorded.
C. to check the internal control system in business.
D. to check the bank balance.
ANSWER: B
54. The purpose of the audit of wage payment is to determine that __________.
A. the work is executed completely for which the workers are paid wages.
B. the workers are paid the correct amount of wages under proper authorization.
C. the workers are working regularly.
D. none of the above.
ANSWER: B
55. One of the audit procedures to check the issue of share capital of the newly formed company is
__________.
A. the memorandum of association and articles of association.
B. the share transfer register.
C. the issue of debenture.
ANSWER: A
56. Capital reserves are created out of profits of __________.
A. a revenue nature.
B. a capital nature.
C. a secret reserve.
D. contingency reserve.
ANSWER: B
57. 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.
ANSWER: A
58. The work of one clerk is automatically check by another clerk is called _________.
A. Internal control.
B. Internal check.
C. Internal audit.
ANSWER: B
59. The owners of the company are called __________.
A. Debenture holders.
B. Debtors.
C. Shareholders.
ANSWER: C
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60. Verification is __________.
A. the art of recording the business transaction.
B. an examination of the books of accounts.
C. the act of establishing the accuracy of entries in the books of accounts.
ANSWER: C
61. Depreciation is _________.
A. the decrease in the value of an asset.
B. the increase in the value of an asset.
C. an appreciation to the company.
D. a credit to shareholders.
ANSWER: A
62. The main objects of investigation is _________.
A. to discover errors and frauds.
B. to prevent errors and frauds.
C. to verify statements.
D. all the above.
ANSWER: D
63. Internal controls and internal check are ____________.
A. one and the same.
B. different.
C. internal control includes internal check.
ANSWER: C
64. Share may be issued _____________.
A. at par.
B. at premium.
C. at discount.
D. all the above.
ANSWER: D
65. The liabilities of an auditor can be _________.
A. Civil.
B. Criminal.
C. Civil and Criminal.
D. Official.
ANSWER: C
66. An auditor is like a ______.
A. Watchman.
B. foolish dog.
C. mad dog.
D. watch dog.
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ANSWER: B
67. Special audit is necessary for _________.
A. inefficient concern.
B. processing concern.
C. trading concern.
D. manufacturing concern.
ANSWER: A
68. The first auditors appointed hold office ____________.
A. for a period of one year.
B. for a period of two years.
C. for a period of three years.
D. till the conclusion of the first annual general meeting.
ANSWER: D
69. Audit of company account is _____________.
A. compulsory.
B. unnecessary.
C. avoidable.
D. depends upon directors.
ANSWER: A
70. The companys 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.
ANSWER: A
71. Internal auditor of a company must be _______________.
A. Cost accountant.
B. Chartered accountant.
C. ICWA.
D. need not possess any professional qualification.
ANSWER: B
72. 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.
ANSWER: C
73. A company auditor can be removed by _________________.
A. board of directors.
B. managing director.
C. any director.
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D. general meeting.
ANSWER: D
74. A vacancy caused by resignation of an auditor is filled by _________.
C. general meeting.
D. central government.
ANSWER: C
75. Cost audit under section 233(b) of the companies act is ___________.
A. voluntary.
B. compulsory.
C. advisable.
D. avoidable.
ANSWER: C
76. Duties of a company auditor are defined by __________.
A. Memorandum of Association.
B. Articles of Association.
C. Companies Act 1956.
D. Agreement between company and the auditor.
ANSWER: C
77. When at an annual general meeting of a company no auditor is appointed or reappointed. In that case
________.
A. the central government appoints a person to fill the vacancy.
B. the board of directors appoints a person to fill the vacancy.
C. the managing director of the company appoints a person to fill the vacancy.
D. none of these can appoint a person to fill the vacancy.
ANSWER: A
78. Audit in depth means __________.
A. audit of each and every item.
B. intensive audit of each and every item.
C. intensive audit of a few items.
D. audit of a few selected items.
ANSWER: C
79. When a company engages a Chartered Accountant as its internal auditor, the external auditor
_____________.
A. need not check the areas covered by internal audit.
B. should ignore the existence of internal audit.
C. should incorporate the internal auditors report with his own.
D. should examine the system and efficiency of internal audit and devise a suitable audit programme.
ANSWER: D
80. Which of the following factors likely to be identified as a fraud factor by the auditor?
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A. initial public offer of quality shares to raise additional capital for expansion
B. Bank reconciliation statement includes deposits-in-transit.
C. Plant and machinery is sold at a loss.
D. The company has made political contributions.
ANSWER: A
81. The most difficult type of misstatement to detect fraud is based on __________.
A. related party purchases.
B. related party sales.
C. the restatement of sales.
D. omission of a sales transaction from being recorded.
ANSWER: D
82. Which of the following is not likely to be a fraud risk factor relating to management characteristics?
A. Tax evasion.
B. Failure to correct known weakness in internal control system.
C. Adoption of conservative accounting principles.
D. High management turnover.
ANSWER: C
83. Professional skepticism requires that the auditor assume that management is _________.
A. reasonably honest.
B. neither honest nor dishonest.
C. not necessarily honest.
D. dishonest unless proved otherwise.
ANSWER: B
84. Which of the following information should a successor auditor obtain during the inquiry of the
predecessor auditor before accepting engagement?
A. Information about integrity of management.
B. Disagreement with management concerning auditing procedures.
C. Review of internal control system.
D. Organization structure.
ANSWER: A
85. The audit engagement letter generally should include a reference to each of the following except
___________.
A. limitations of auditing
B. responsibilities of management with respect to audit work.
C. expectation of receiving a written management representation letter.
D. a description of the auditors method of sample selection.
ANSWER: D
86. The use of an audit engagement letter is the best method of assuring the auditor will have which of the
following?
A. Auditor will obtain sufficient appropriate audit evidence.
B. Management representation letter.
C. Access to all books, accounts and vouchers required for audit purpose.
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D. Co-operation from other auditors.
ANSWER: C
87. The use of an audit engagement letter is the best method of documenting ________.
A. The required communication of significant deficiencies in internal control.
B. Significantly higher control risk than that assessed in prior audit.
C. Objective and scope of auditors work.
D. Notification of any changes in the original arrangements of the audit.
ANSWER: D
88. An auditor who accepts an audit but does not posses the industry expertise of the business entity should
______________.
A. engage experts.
B. obtain knowledge of matters that relate to the nature of entity business.
C. inform management about it.
D. take help of other auditors.
ANSWER: B
89. The least import element in the evaluation of an audit firm system of quality control would relate to
___________.
A. assignment of audit assistants.
B. system of determining audit fees.
C. consultation with experts.
D. confidentiality of clients information.
ANSWER: B
90. The primary purpose of establishing quality control policies and procedures for deciding on client
evaluation to ___________.
A. ensure adherence to generally accepted auditing standards.
B. acceptance or retention of clients whose management does not lack integrity.
C. ensure audit fees is charged according to the type of audit work assigned.
D. medical policies.
ANSWER: B
91. Which of the following is not a quality control consideration on accepting a new client?
A. Availability of audit assistants with necessary skill and competence.
B. Provision of other services to the client which may impair independence.
C. Predecessor auditor advice as to whether audit fees were paid promptly.
D. Review of audit work done by one partner by the other.
ANSWER: C
92. Audit of banks is an example of __________.
A. Statutory audit.
B. Balance sheet audit.
C. Concurrent audit.
ANSWER: D
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93. Concurrent audit is a part of ______________.
A. internal check system.
B. continuous audit.
C. internal audit system.
D. final audit.
ANSWER: C
94. In India balance sheet audit is synonymous to _______________.
A. Annual audit.
B. Continuous audit.
C. Detailed audit.
D. Statutory audit.
ANSWER: A
95. Audit in depth is synonymous for ____________.
A. complete audit.
B. completed audit.
C. final audit.
D. detailed audit.
ANSWER: D
96. Balance sheet audit included verification of ________.
A. assets.
B. liabilities.
C. income and expenditure accounts where appropriate.
D. all of the above.
ANSWER: D
97. 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 organisation has a good internal control system.
D. It is expensive.
ANSWER: C
98. Which of the following is not a fact of EPA?
A. Economic audit.
B. Efficiency audit.
C. Expenditure audit.
D. Effectiveness audit.
ANSWER: C
99. Balance sheet does not include ___________.
A. verification of assets and liabilities.
B. vouching of income and expense accounts related to assets and liabilities.
C. examination of adjusting and closing entries.
D. routine checks.
ANSWER: D
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100. When issuing unqualified opinion the auditor who evaluated 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. estimated of the total likely misstatement is more than materiality level.
D. estimates of the total likely misstatement cannot be made.
ANSWER: B
101. In determining the level of materiality for an audit what should not be considered?
A. Prior years errors.
B. The auditor remuneration.
C. Adjusted interim financial statement.
D. Prior year financial statements.
ANSWER: B
102. Analytical procedures issued in the planning stage of an audit, generally ___________.
A. helps to determine the nature, timing and extent of other audit procedures.
B. directs attention to potential risk areas.
C. indicate important aspects of business.
D. all of the above.
ANSWER: D
103. Which of the following statement is most closely associated with analytical procedure applied at
substantive stage?
A. It helps to study relationship among balance sheet accounts.
B. It helps to discover material misstatements in the financial statements.
C. It helps to identify possible oversights.
D. It helps to accumulate evidence supporting the validity of a specific account balance.
ANSWER: D
104. What is the primary objective of analytical procedures used in the overall review stage of an audit?
A. To help to corroborate the conclusions drawn from individual components of financial statements.
B. To reduce specific detection risk.
C. To direct attention to potential risk areas.
D. To satisfy doubts when questions arise about a client ability of continue.
ANSWER: A
105. Of the following, which is the least persuasive type of audit evidence?
A. Bank statements obtained from the client.
B. Documents obtained by auditor from third parties directly.
C. Carbon copies of sales invoices inspected by the auditor.
D. Computations made by the auditor.
ANSWER: C
106. Which of the following statement is generally, correct about the reliability of audit evidence?
A. To be reliable, evidence should conclusive rather than persuasive.
B. Effective internal control system provides reliable audit evidence.
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C. Evidence obtained from outside sources routed through the client.
D. All are correct.
ANSWER: B
107. Which of the following Auditing Assurance Standard deals with Audit planning?
A. AAS-7.
B. AAS-8.
C. AAS-9.
D. AAS-3.
ANSWER: B
108. Audit Programme is prepared by ___________.
A. the auditor.
B. the client.
C. the audit assistants.
D. the auditor and his audit assistants.
ANSWER: D
109. The working papers which auditor prepares for financial statements audit are _______ .
A. evidence for audit conclusions.
B. owned by the client.
C. owned by the auditor.
D. retained in auditor office until a change in auditors.
ANSWER: C
110. The quantity of audit working papers complied on engagement would most be affected by
_________________.
A. management integrity.
B. auditor experience and professional judgement.
C. Auditor qualification.
D. control risk.
ANSWER: B
111. Which of the following best describes the primary purpose of audit programmed preparation?
A. To detect errors or fraud.
B. To comply with GAAP.
C. To gather sufficient appropriate evidence.
D. To assess audit risk.
ANSWER: C
112. Which of the following is not an advantage of the preparation of working paper?
A. To provide a basis for review of audit work.
B. To provide a basis for subsequent audits.
C. To ensure audit work is being carried out as per Programme.
D. To provide a guide for advising another client on similar issues.
ANSWER: D
113. The auditor permanent working paper file should not normally, include ________
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A. extracts from clients bank statements.
B. past years financial statements.
C. attorney letters.
D. debt agreements.
ANSWER: A
114. Who is responsible for the appointment of statutory auditor of a limited company?
A. Directors of the company.
B. Members of the company.
C. The central government.
D. The state government.
ANSWER: B
115. Which of the following sections deals with qualification of the auditor?
A. Section 226(1) and Section 226(2).
B. Section 224(1) and Section 224(2).
C. Section 226(3) and Section 226(4).
D. Section 224(3) and Section 224(4).
ANSWER: A
116. Which of the following statement is not true?
A. A partnership firm can be appointed as a statutory auditor of limited company.
B. Appointment can be made in the name of the firm.
C. Majority of the partners should be practicing in India.
D. All partners should be chartered account.
ANSWER: C
117. 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.
ANSWER: D
118. The term of the auditor ship of first auditor would be from the date of appointment till _.
A. the conclusion of statutory meeting.
B. the conclusion of first general meeting.
C. the conclusion of next annual general meeting.
D. the date of removal.
ANSWER: B
119. In case the directions fail to appoint first auditors, 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.
ANSWER: A
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120. Which of the following statement is not true regarding appointment of statutory auditor by the central
government?
A. Such powers have been conferred upon it by section 224(3).
B. If a company fails to appoint an auditor at a general meeting.
C. If an auditor refuses to accept appointment, the powers of the central government can be exercised.
D. Lay man can be appointed as an auditor.
ANSWER: B
121. The auditor of a government company is appointed by the C & AG. His remuneration is fixed by
_____________.
A. the C & AG.
B. the shareholders.
C. the shareholders at an annual general meeting.
D. the board of directors.
ANSWER: B
122. The section which contains provisions regarding remuneration of the auditor is _____.
A. Section 224(9).
B. Section 224(7).
C. Section 224(8).
D. Section 224(6).
ANSWER: C
123. The authority to remove the first auditor before the expiry of term is with ___________.
A. the shareholders in a general meeting.
B. the shareholders in the first annual general meeting.
C. the board of directors.
D. the central government.
ANSWER: A
124. Which of the following statement is not correct regarding removal of first auditor before expiry of the
term?
A. He is removed at a general meeting.
B. The shareholders are authorized to do so.
C. The approval of the central government is required for such removal.
D. The provision for such removal are contained in section 224(7).
ANSWER: C
125. The retiring auditor does not have a right to _________.
A. make written representations.
B. get his representation circulated.
C. be heard at the meeting.
D. speak as a member of the company.
ANSWER: D
126. Who out of the following cannot be appointed as a statutory auditor of the company?
A. Erstwhile director.
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B. Internal auditor.
C. Relative of a director.
D. Only (2) and (3).
ANSWER: B
127. A statutory auditor has a right of access at all times to ___________.
A. books and accounts of a company.
B. books, account and documents of the company.
C. books, accounts and vouchers of the company.
D. notices and documents of the company.
ANSWER: C
128. The auditor has a right to _________.
A. obtain information and explanation.
B. obtain information and explanation from the employees and officers.
C. obtain information and explanation necessary for the purpose of audit.
D. both (2) and (3).
ANSWER: A
129. The branch auditor is appointed by ____________.
A. shareholders in an annual general meeting.
B. shareholders in general meeting.
C. board of directors in board meeting.
D. any of the above.
ANSWER: B
130. Auditor of a _______ company does not have right to visit foreign branches of the company.
A. unlimited liability.
B. manufacturing.
C. banking.
D. non-profit making.
ANSWER: B
131. Special audit is conducted at the order of the central government. Which section givers such powers?
A. Section 233(A).
B. section 233(B)
C. Section 242(A).
D. Section 242(B).
ANSWER: C
132. Who among the following can be appointed as special auditor by the central government?
A. The statutory auditor.
B. Chartered accountant in practice.
C. Any chartered accounted who is not in practice.
D. Both (1) and (2).
ANSWER: B
133. As per C & AG Act, 1971 the tenure of the comptroller and Auditor General is ______ a. four years.
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A. four years.
B. five years.
C. six years.
D. seven years.
ANSWER: C
134. The part of Government Audit which is concerned with examining whether the money has been spent
for the purpose specified in Appropriation Act is called _____________.
A. audit of sanctions
B. audit of provisions of funds.
C. audit of rules and orders.
D. audit of financial property.
ANSWER: B
135. Audit of transactions does not include __________.
A. propriety audit.
B. efficiency cum performance audit.
C. audit of receipts.
D. audit of expenditure.
ANSWER: B
136. The income tax department has sent MR. X refund of Advance tax. The government Auditor detected
this while conducting ____________.
A. audit of expenditure.
B. performance audit.
C. audit of stores and stock.
D. audit of receipts.
ANSWER: A
137. Audit of rent, deposits and remittances does not cover ____________.
A. audit of borrowings.
B. audit of amortization of debt.
C. Audit of sanctions.
D. remittance audit.
ANSWER: C
138. Audit reports on PSU are ____________.
A. submitted to the president/governor for being laid before the parliament
B. sent to concerned ministries/departments.
C. submitted to bod of concerned psu.
D. submitted to pwd department.
ANSWER: B
139. Who among the following is eligible to be appointed as an audit of Government Company?
A. A chartered accountant in practice.
B. A chartered accountant whether in practice or not.
C. An auditor appointed by the A & AG.
D. An unsound mind person.
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ANSWER: A
140. The statutory auditor of a Government Company submits his report to _________.
A. the BOD of the company
B. the C & AG.
C. the legislature.
D. the company secretary.
ANSWER: B
141. Which of the following statement is not distinguishing feature for computer based processing and
manual processing?
A. Errors in a CIS environment are less systematic as compared to error in manual processing.
B. The potential for human error in the CIS environment is greater as compared to manual system.
C. In a computer based accounting system, audit trail is in electronic form.
D. Computer processing offers management a variety of analytical tools.
ANSWER: A
142. To avoid invalid data input, a bank added an extra number at the end of each account number and
subjected the new number to an algorithm. This technique is known as _______.
A. Dual read.
B. Test for reasonableness.
C. Check digit.
D. Occurrence of correction.
ANSWER: C
143. When computer programmed or files can be accessed from terminals, access can be limited to
authorized individuals by __________.
A. appointing a librarian.
B. controlling passwords.
C. appointing EEP auditor.
D. Both (a) and (b).
ANSWER: D
144. Erroneous data has been detected by computer program controls. It has been excluded from
processing and printed separately Error Report. Who should most probability by review and follow up on
this report?
A. System analyst.
B. Data control group.
C. Programmer.
D. Computer operator.
ANSWER: A
145. General Controls will be ineffective when EDP Department ___________.
A. participates in computer software acquisition decisions.
B. design documentations for computerized operations.
C. originate changes in master files.
D. provide physical security for programme files.
ANSWER: C
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146. Which of the following activities would most likely be performed by EDP department?
A. Authorizing transactions.
B. Parity checks.
C. Distributing output.
D. Correction of transaction errors.
ANSWER: C
147. The completeness of wages figure can be tested by comparing the number of time cards to be
processed with transaction on wages sheet. This type of control techniques is called ___________.
A. Check total.
B. Control total.
C. Occurrence correction.
D. Check digit.
ANSWER: D
148. Which of the following will not affect audit in a CIS environment?
A. The objective of expression of opinion on financial statements.
B. Compliance procedures adopted by the auditor.
C. Performance of substantive procedures.
D. Evaluation of inherent risk and control risk.
ANSWER: A
149. Which of the following statement is not true of the test data approach in a test of computerized
accounting system?
A. Test data tests only those controls which the auditor wished to rely.
B. Test data should consist of data related to all controls prevalent in the organisation.
C. The result of test data indicates that all the application and general controls are functioning properly.
D. Test data processed by the client computer programmed under the auditors control.
ANSWER: B
150. Which of the following CAAT allow fictitious transactions planted by the auditor to be processed
along with real ones on client system?
A. Integrated test facility.
B. Test data approach.
C. Generalized audit software.
D. Parallel simulation.
ANSWER: A
151. An auditor is least likely to use computer software to _________.
A. access client data files.
B. assess control risk.
C. performing analytical procedures.
ANSWER: D
152. Which of the following documents is not relevant for vouching cash sales?
A. Daily cash summary.
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B. A salesman summary.
C. Monthly statements sent to customers.
D. Bank statement.
ANSWER: C
153. The auditor should examine subsequent realization of revenue such as dividends, interest, and
commission etc to _____________.
A. identify cases of unrecorded revenue.
B. ensure proper disclosure in the balance sheet .
C. recomputed accrued income on the data of balance sheet.
D. performance of procedures.
ANSWER: A
154. To test whether sales have been recorded, the auditor should draw a sample from a file ______.
A. purchase orders.
B. sales orders.
C. sales invoices.
D. bill of lading.
ANSWER: C
155. For vouching of which item, the auditor is most likely to examine cost records?
A. Commission earned.
B. Bad debts recorded.
C. Credit sales.
D. Sale of scrap.
ANSWER: D
156. The Guidance Note on Revenue issued by the ICAI does not deal with _________.
A. sales revenue.
B. revenue rendering service.
C. revenue from sale of fixed assets.
D. income from interest, dividend etc.
ANSWER: C
157. An auditor conducts a surprise check on the pay day that is the day wages and salaries are paid. The
primary purpose of this audit procedure is _________.
A. to ensure that there are no ghost workers.
B. to ensure the casual workers employed are authorized by the supervisors
C. to test procedures for distributing pay cheques.
D. to obtain understanding of internal control system.
ANSWER: C
158. Which of the following would prevent double payment of the same voucher?
A. The person signing the cheque should cancel the supporting documents.
B. Cheques should be signed by at best two persons.
C. The data of payment of vouchers of similar nature should be the same or close to each other.
D. Cheques should not be signed by any one person.
ANSWER: A
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159. In case of unclaimed wages, auditor should examine whether _________.
A. the amount has been deposited in a separate bank account.
B. deposited with the cashier.
C. held in a safe deposit box.
D. held with the company accountant.
ANSWER: A
160. While vouching wages, auditor should examine whether there is proper segregation of duties. Which
of the following activities should not be done by same department?
A. Maintaining personnel records and approving changing in wages rates.
B. Proposing pay roll summary and disbursement of wages.
C. Making salary statements and filing returns.
D. Comparing time clock records with the time reports prepared by the supervisor.
ANSWER: B
161. In order to vouch, which of the expenses, the auditor will examine Bill of entry?
A. Custom.
B. Excise duties.
C. Sales tax.
D. Income tax.
ANSWER: A
162. While vouching, how will the auditor ensure himself that all credit sales transactions have been
recorded by the entity?
A. Examining cut-off points.
B. Matching entries in the sales book against renumbered sales invoices and good outward notes.
C. Counting the number of invoices and matching the number with entries on sales book
D. Both (a) and (b).
ANSWER: D
163. In case of sales return, the auditor should examine which documents?
A. Credit notes, advice notes and inward return notes.
B. Debit notes, advice notes and inward return notes.
C. Purchase invoices, advice notes and inward return notes.
D. Credit notes, inspection report and inward return notes.
ANSWER: D
164. An internal auditor discovered that fictitious purchases have been recorded by the purchase clerk. This
indicates absence of which control?
A. Purchase invoices are independently matched with purchase orders and goods received notes.
B. Goods received notes requires the signature of individual who authorized the purchase.
C. Routine checks are performed by internal auditor fortnightly.
D. Purchase function and production function are clubbed in one department.
ANSWER: A
165. Which of the following is most crucial to a purchase department?
A. Reducing the cost of acquisition.
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B. Selecting supplies.
C. Authorizing the acquisition of goods.
D. Assuring the quality of goods.
ANSWER: C
166. The auditor is most likely to examine related party transactions very carefully while vouching
__________.
A. credit sales.
B. sales returns.
C. credit purchases.
D. cash purchases.
ANSWER: C
167. In order to vouch bought ledger, the auditor obtain confirmation from creditors. The principal reason
for the auditor to examine suppliers statements at balance sheet date is to obtain evidence that _________.
A. the supplier exists.
B. there are no unrecorded liabilities.
C. recorded purchases actually occurred.
D. to link creditors with cash book entries.
ANSWER: B
168. The creditors accounts generally, have credit balance. Debit balance may be due to __________.
A. advance paid against an order.
B. goods returned.
C. wrong debit to supplier account.
D. any of the above.
ANSWER: D
169. In case of vouching the auditor is least likely to examine authorization by appropriate authority in case
of _____________.
A. bad debts written off.
B. sales return.
C. discount allowed to customers as per organizational policy.
D. purchase return.
ANSWER: C
170. Which of the following is not true with regard to verification of assets?
A. It invoices substantiation of occurrence of transactions.
B. Its objective is to establish existence, ownership, possession, valuation and disclosure of assets.
C. The auditor has to form an opinion on different aspects.
D. The auditor has to form an opinion on managerial aspects.
ANSWER: A
171. Which of the following statements is not true?
A. Valuation of assets is the responsibility of management.
B. The auditor can rely on a certificate issued by an authorized valuationer as to the valuation of assets
in the balance sheet.
C. The auditor should have the asset as per generally accepted accounting principles.
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D. Valuation is not part of auditor duty.
ANSWER: C
172. Companies Act restricts the maximum number of companies with paid up capital of Rs. 25 lakhs or
more each to which on can be appoint as an auditor to ________.
A. 5.
B. 10.
C. 15.
D. 20.
ANSWER: B
173. A chartered Accountant is not disqualified to be an auditor of a company if he is _____.
A. an employee of the company.
B. the managing director of the company.
C. indebted to the company for Rs. 1000.
D. a shareholder in that company.
ANSWER: D
174. Which one of the following practices is permissible under the code of Ethics to be followed by an
auditor?
A. An auditor who gives an expert opinion on a client company may be an underwriter of the same.
B. Understatement of the facts only for tax planning purposes.
C. Prescribing a fee contingent upon the tax liabilities or savings effected.
D. Engaging in a business conjointly with the client.
ANSWER: A
175. The auditor is generally expected to carry out the following in a particular sequence ___.
a.verification of assets and liabilities. b.vouching of transaqctions. c.checking of valuation of sssets and
liabilities.
A. 1,2 and 3.,
B. 2,1 and 3.
C. 2,3 and 1.
D. 3,2 and 1.
ANSWER: C
176. For granting subsidy to the sick units, the audit required would be ___________.
A. financial audit.
B. internal audit.
C. management audit.
D. statutory audit.
ANSWER: A
177. Surprise checks are part of ____________.
A. an auditor working papers.
B. an audit programme.
C. an auditors report.
D. an accounting standard.
ANSWER: B
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178. Physical verification of fixed assets is a primary responsibility of the _________.
A. auditor.
B. management.
C. government.
D. shareholders.
ANSWER: A
179. Statutory auditor of a company is the case of a casual vacancy may be appointed by the ___________.
C. extraordinary general meeting.
D. government concerned.
ANSWER: A
180. The auditor of a company not supposed to issue qualified report when __________.
A. goodwill worth Rs. 100000 built up when the company is not shown in the balance sheet.
B. goodwill is shown in the balance sheet although it has been totally lost.
C. balance sheet and profit and loss account show a true and correct view of the company. affair and are
drawn in conformity with law.
D. proper books of accounts as required by law have been refused access to some of these books.
ANSWER: D
181. The scope of external audit in the case of a partnership firm is decided by the ________.
A. Companies Act.
B. Partnership Act.
C. Letter of appointment of the auditor.
D. Income Tax Act.
ANSWER: C
182. Consider the following activities:valuation,verification,vouching.
A. 3,1,2.
B. 3,2,1.
C. 2,3,1.
D. 1,2,3.
ANSWER: A
183. Consider the following statement. Continuous audit is useful because __________. a.more details
checking is possible,b.audit can be completed quite quickly,c.figures in the accounts cannot be altered as
the auditor visits several times,d.internal check can be done away with.
A. 1 and 2 are correct.
B. 2 and 4 are correct.
C. 2,3 and 4 are correct.
D. 1,3 and 4 are correct.
ANSWER: A
184. Consider the following documents:1.Audit note book,2.Audit programme,3.Audit report,4.Audit
files.The correct sequence in which an audit prepares the documents is
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A. 1,2,3,4.
B. 2,1,4,3.
C. 1,2,4,3.
D. 2,1,3,4.
ANSWER: C
185. Which of the following pairs are correctly matched?
A. Test Check - Random Checking.
B. Internal Check - A system of automatic checking.
C. Internal control - Includes internal check and internal audit.
D. Investigation - General examination of all accounting records.
ANSWER: D
186. When the auditor examines and tests the clients accounting and other control systems to see whether
or not they constitute a reliable base for the preparation of accounts, then it is known as ______________.
A. Balance sheet audit.
B. System audit.
C. Continuous audit.
D. Internal audit.
ANSWER: D
187. Audit Note Book is a ____________.
A. personal notebook of an auditor.
B. record of important points and enquires which an auditor has to refer to his clients.
C. records of mistake and errors detected during the course of audit of account books.
D. record of work performed by an auditor.
ANSWER: C
188. Which one of the following statements regarding the internal check system is correct?
A. Have an accurate record of all the business transactions.
B. Know the accounting method followed in the business.
C. Plan for future audit works.
D. Ascertain the profit earning capacity of the business.
ANSWER: B
189. By observing, testing and assessing, an auditor examines the system of ___________.
A. internal audit.
B. internal control.
C. continuous audit.
D. statutory audit.
ANSWER: B
190. An auditor of a partnership firm is appointed as per _____________.
A. status.
B. government orders.
C. agreement .
D. convention.
ANSWER: C
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191. . A company auditor may be removed in the meeting of the ___________.
A. board of directors when the managing director is also present.
B. board of directors.
C. majority shareholders.
D. general body of share holders.
ANSWER: D
192. Management audit is conducted by ____________.
A. the statutory auditor.
B. government auditor.
C. cost auditor.
D. none of these.
ANSWER: D
193. System of internal check is said to exist in an 0rganisation when _______.
A. an employee is specifically deputed to check the work of another employee.
B. the departmental head checks the work of employees.
C. another employee of the same department checks the work of the employee in routine office
procedure.
D. some outside experts check the work of employees.
ANSWER: C
194. Internal auditor is appointed by the _____________.
A. shareholders of the company.
B. statutory auditor.
C. Institute of internal auditors of India.
D. Board of directors of the company.
ANSWER: D
195. Which one of the following is true of the position of an auditor regarding the system of internal check
in the organisation?
A. He should acquaint himself with the system of internal check.
B. He should monitor and supervise the system of internal check.
C. He himself should lay down the system of internal check.
D. He has nothing to do with the system of internal check.
ANSWER: B
196. In case of audit of statutory report, an auditor is expected to give his report on the ____.
A. Number of shares allotted, amount received in cash and summarized, Receipt and payment account.
B. Authorized capital, subscribed capital and paid-up capital.
C. Profit and loss account, Balance sheet and Directors report.
D. Director qualification calls in arrears and calls in advance.
ANSWER: A
197. Working papers which contain a record of the audit work are the property of
A. Company.
B. Auditor.
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C. Registrar of companies.
D. Government of India.
ANSWER: B
198. Sampling is used in the case of _____________.
A. collection of debts by the accountant.
B. test checks by the auditor.
C. checking pass-book entries by the accountant.
D. suppression by the works managers.
ANSWER: B
199. A continuous audit is not suitable where the _____________.
A. transactions are few but complicated.
B. there is no urgency to finalize the accounts on a particular date.
C. internal work is being carried on in a satisfactory manner.
D. system of internal check in operation is not satisfactory.
ANSWER: C
200. Management audit is ___________.
A. an independent appraisal of the total a management process.
B. a statutory requirement.
C. an investigation into the conduct of director.
D. an independent appraisal of competitiveness of business.
ANSWER: A
201. The Audit report along with annual accounts is given by _________.
A. statutory auditor.
B. internal auditor.
C. government auditor.
D. secretarial auditor.
ANSWER: A
202. Management audit is ordered by the ___________.
A. workers of a company.
B. government.
C. board of directors.
D. SEBI.
ANSWER: C
203. When an auditor detects material weakness in the checks and control system of the company under
audit, it should report his findings as per __________.
A. ICAI orders.
B. SEBI orders.
C. MAOCARO order.
D. ICWAI orders.
ANSWER: C
204. The remuneration of an auditor of partnership firm is fixed by _____.
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A. The Partnership Act.
B. The Companies Act.
C. The Government.
D. None of these.
ANSWER: D
205. If shareholders fails to appoint or reappoint auditors in a limited company in an Annual General
Meeting the vacancy will be filled by the ___________.
A. SEBI.
B. Comptroller and Auditor General of India.
C. Central government.
D. Registrar of companies.
ANSWER: C
206. As far as a company is concerned, which one of the following pairs is not correctly matched?
A. Internal audit - Obligatory.
B. Statutory audit - Mandatory.
C. Continuous Audit - Optional.
D. Management - Voluntary.
ANSWER: A
207. A file which contains rules governing the organisation under audit is known as _____.
A. Convert file.
B. Permanent file.
C. Routine file.
D. Precedence file.
ANSWER: B
208. Where the auditor places a high degree of reliance on an internal central procedure the acceptable risk
of over reliance would be _________.
A. low.
B. high.
C. moderate.
D. nil.
ANSWER: B
209. Special audit of the accounts of a company is directed by ______________.
A. shareholders of the company.
B. comptroller and auditor general of india.
C. company law board.
D. central government.
ANSWER: D
210. Section 224 of the companies Act, 1956 deals with __________.
A. special audit.
B. secretarial audit.
C. cost audit.
D. appointment and remuneration of auditor.
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ANSWER: D
211. Vouching may be termed as_______.
A. identification of the documentary evidence supporting the transaction.
B. verification of the document supporting the transaction.
C. authentication of the document supporting the transaction.
D. verification of accuracy and authenticity of the transaction.
ANSWER: B
212. Interim audit refers to an audit conducted ___________.
A. in between the two different accounting years.
B. in between two statutory annual audits within the same accounting period.
C. in between one statutory audit and an internal audit in the same accounting period.
D. in between one statutory audit, one management audit and one internal audit.
ANSWER: B
213. Audit techniques are concerned with _____________.
A. examination of those evidences which have been traced by audit procedures.
B. application of generally accepted accounting principles to particular phases or a financial statement.
C. accuracy and validity of management authorization to the account section employees.
D. methods of conducting a business affair and reporting in annual report.
ANSWER: A
214. The main purpose of an independent audit is to ___________.
A. check and correct frauds and errors.
B. help in detecting frauds and errors.
C. determine if the financial statements fairly represent the actual financial position and the working
results of the organization.
D. help in formulating future plans.
ANSWER: C
215. Management refers to ______________.
A. examination of books and audit of accounts done by the management.
B. The periodic assessment of companys activities by the statutory auditor.
C. periodic assessment of company managerial planning, organizing, actuating and controlling compared
to norm of successful operation.
D. auditor assessment of the financial statement of the entity
ANSWER: C
216. An arrangement in which the accounting work of each individual is checked by other members is
known as ________.
A. internal audit.
B. external audit.
C. internal check.
D. test checking.
ANSWER: C
217. The most important objective of internal audit is ____________.
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A. early detection of errors and fraud.
B. facilitating final audit.
C. early finalization of annual account.
D. ensuring systematic accounting.
ANSWER: A
218. Test Checking reduces the _________.
A. power of an auditor.
B. expenses of auditor.
C. work of an auditor.
D. liability of an auditor.
ANSWER: C
219. An employee cannot be an auditor of the company because __________.
A. he cannot find his own mistakes.
B. a person cannot audit his own account.
C. he may give bias and subjective views.
D. it is prohibited by company law.
ANSWER: C
220. Except in special cases the retiring auditor is automatically _________.
A. re-appointed.
B. dismissed.
C. disqualified.
D. suspended.
ANSWER: D
221. An auditor can be held liable under CA act 1949 for _________.
A. breach of control.
B. negligence.
C. criminal officer.
D. professional misconduct.
ANSWER: A
222. Which of the following is the most detailed audit?
A. Continuous audit.
B. Statutory audit.
C. Interim audit.
D. Balance sheet audit.
ANSWER: D
223. __________ Audit is a comprehensive critical review of all aspects or processes of management.
A. Company.
B. Management.
C. Conventional .
D. Computerized.
ANSWER: D
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224. _________ audit is that branch of auditing in which the process of audit is used to evaluate the social
objectives of a company.
A. Management.
B. Cost.
C. Tax.
D. Interim.
ANSWER: A
225. An auditor submits a _______ report when the whole of the audit process is completed for a particular
audit period of the business concern.
A. final
B. second.
C. first.
D. interim.
ANSWER: B
226. An auditor submits a _________ report during the audit period on some specific matters.
A. opinion.
B. qualified.
C. find.
D. interim.
ANSWER: D
227. __________ is a technical term which refers to the inspection of documentary evidence supporting
and substantiating a transaction.
A. Checking.
B. Vouching.
C. Valuation.
D. Routine checking.
ANSWER: A
228. _______ refers to such audit programme where plans for the auditor are not fixed.
A. Special audit.
B. Fixed audit.
C. Pre-determined audit.
D. none of these.
ANSWER: D
229. Audit at the end of the year is known as ___________.
A. specific audit.
B. general audit.
C. government audit.
D. periodical audit.
ANSWER: B
230. Accountancy work is done throughout the accounting period although auditing work is done
____________.
A. after the end of accounting period.
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B. in the middle of accounting period.
C. from the second month of accounting period.
D. after the end of one month.
ANSWER: A
231. A special auditor has to submit his report to the __________.
A. management
B. state government.
C. central government.
D. none of these.
ANSWER: D
232. Balance sheet audit is useful where _____.
A. the concern is a small one.
B. the internal check is weak.
C. the concern is a big one.
D. the concern is banned.
ANSWER: A
233. The main object of audit of accounts of a partnership firm is to _______.
A. meet the statutory requirements.
B. increase the profits.
C. increase the goodwill.
D. detect errors and frauds.
ANSWER: D
234. The main object of audit of account of a joint stock company is __________.
A. detection and prevention of frauds.
B. detection and prevention of errors.
C. detection and prevention of errors and frauds.
D. To find whether the financial statements are drawn up according to the companies act.
ANSWER: D
235. Auditing means where ____ ends.
A. accounting.
B. inventory valuation.
C. business.
D. selling.
ANSWER: A
236. The internal auditor of a joint stock company _________.
A. need not possess the qualification laid down in the companies act.
B. should be a chartered accountant.
C. should be a chartered accountant or a cost accountant.
D. should hold some other professional qualification.
ANSWER: A
237. Internal check is meant for __________.
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A. prevention of frauds.
B. detection of frauds.
C. helping audit in depth.
D. the existence of a good system of internal check reduces to a great extent.
ANSWER: A
238. The existence of a good system of internal check reduces to a great extent ________.
A. the work of the auditor
B. the liability of the auditor.
C. neither work nor liability of the auditor.
D. both work and liability of an auditor.
ANSWER: A
239. Verification of assets involves _________.
A. physical verification of assets.
B. verification of proper values of assets.
C. verifying that assets are free from any charge.
ANSWER: D
240. Audit of sole proprietorship is _________.
A. compulsory.
B. advisable.
C. not compulsory.
D. applicable.
ANSWER: C
241. The duties of auditor of a partnership firm are regulated by ______.
A. partnership act.
B. partnership deed.
C. agreement between partnership and auditor.
D. companies act.
ANSWER: C
242. Test checking implies ________.
A. checking only a few items in detail.
B. checking each and every item.
C. checking a representative sample of items.
D. checking a part of books.
ANSWER: C
243. An auditor of a company gives __________.
A. his expert opinion about the accounts.
B. critical review of accounts.
C. factial position about the accounts.
D. Loan to the company.
ANSWER: A
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244. The company shall inform to the auditor appointed sating that he has been appointed as auditor of the
company within ________ days.
A. 10.
B. 8.
C. 7.
D. 30.
ANSWER: C
245. The auditor shall inform the Registrar of Companies in writing about his acceptance of appointment
within ______ days.
A. 20.
B. 30.
C. 40.
D. 45.
ANSWER: B
246. A voucher is a document _________.
A. it support of an entry made in the books of accounts.
B. it is an extra-ordinary meeting
C. when all other directors are out of station.
D. one person can never constitute the quorum.
ANSWER: A
247. Share capital of a company may be reduced by ________.
A. a special resolution.
B. an ordinary resolution.
C. a board resolution.
D. a special resolution confirmed by court.
ANSWER: D
248. In verifying debits to perpetual inventory records of a non-manufacturing company, the auditor would
investigate the _________.
A. purchase journal.
B. purchase requisitions.
C. purchase orders.
D. vendors invoices.
ANSWER: D
249. In an audit of inventories, an auditor would least likely verify that _________.
A. all inventory owned by the clients is on hand at time of the count.
B. the client has used proper inventory pricing.
C. the financial statement presentation of inventories is appropriate.
D. damaged goods and obsolete items have been properly accounted for.
ANSWER: A
250. A file which contains rules governing the organisation under audit is known as _____.
A. Convert file.
B. Permanent file.
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C. Routine file.
D. Precedence file.
ANSWER: B
Staff Name
Rajakumar.L.
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513C - Principles of Auditing

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513C - Principles of Auditing

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Dr.G.R.

Damodaran College of Science

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