Auditing Mcqs Practice Test

Question 1

Who is responsible for the appointment of statutory auditor of a limited company ?

Accepted Answer

B. Members of the company

Question 2

Which of the following expenses should not be treated as capital expenditure?

Accepted Answer

C. Legal expenses incurred to defend a suit related to title of patent.

Question 3

If the book value of an asset stands at________per cent of the original cost, a company need not provide depreciation on it.

Accepted Answer

C. five

Question 4

Which of the following is a revenue reserve?

Accepted Answer

C. Debenture redemption reserve

Question 5

Which of the following will not lead to creation of secret reserve?

Accepted Answer

C. Goods sent on consignment being shown as actual sales

Question 6

Depreciation does not arise form _______

Accepted Answer

D. remarket expectation

Question 7

Which of the following is not a revenue expense?

Accepted Answer

B. Cost of accessories of motor vehicles spent at the time of purchase

Question 8

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

Accepted Answer

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

Question 9

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

Accepted Answer

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

Question 10

What  would  most  appropriately describe  the risk of  incorrect rejection in terms of substantive testing?

Accepted Answer

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

Question 11

Which of the following statements is not true with respect to management representations obtained as per AAS\xad11?

Accepted Answer

B. It should always be in working

Question 12

Which of the following affects audit effectiveness?

Accepted Answer

D. Both A. and C.

Question 13

Which of the following is not a corroborative evidence?

Accepted Answer

D. Worksheet supporting consolidated financial statements

Question 14

When is evidential matter, generally, considered sufficient?

Accepted Answer

B. When  it  is  enough  to  provide  a  basis  for  giving  reasonable  assurance  regarding truthfulness

Question 15

Which of the following statements  is,  generally,  correct about  the  reliability of  auditevidence?

Accepted Answer

B. Effective internal control system provides reliable audit evidence

Question 16

The  nature, timing and extent of substantive procedures  is _________ related to assessed level of control risk?

Accepted Answer

C. directly

Question 17

In an audit of financial statements, substantive tests are audit procedures that___________?

Accepted Answer

D. may be test of transactions, test of balance and analytical procedures

Question 18

Of the following, which is the least persuasive type of audit evidence?

Accepted Answer

C. Carbon copies of sales invoices inspected by the auditor

Question 19

What is the primary objective of analytical procedures used in the overall review stage of an audit?

Accepted Answer

A. To help to corroborate the conclusions drawn from individual components of financial statements

Question 20

When applying analytical procedures, an auditor could develop independent estimate of an account balance to compare it to\xad___________?

Accepted Answer

D. Prior year audited balance adjusted for trends in the industry