The art of recording the business transactions.

An examination of the books of accounts.

The act of establishing the accuracy of entries in the books of accounts.

Thevacancy caused by resignation of an auditor is filled by

At the general meeting of shareholders

The vacancy caused by resignation at a auditor is filled by

At the general meeting of shareholders

Internal controls and internal check are :

Internal control includes internal check.

Shares issued for consideration other than cash should be vouched with help of

Contract with the party concerned

The company s auditor is expected to give:

A critical review of the accounts.

His expert opinion about the accounts.

A factual position about the accounts.

A critical review of the accounts.

Auditors of a joint stock company are appointed by :

Election at the annual general meeting.

Which of the following statements is not true with regard to teeming and lading ?

To conceal the shortage, the defraud, usually, tries to keep bank and book amounts in daily agreement so that a bank reconciliation will not detect the irregularity.

It results in the deliberate misappropriation of cash receipts

It is associated with cash receipts

If same individual maintains cash receipts and cash payments teeming and lading is likely to exist

To conceal the shortage, the defraud, usually, tries to keep bank and book amounts in daily agreement so that a bank reconciliation will not detect the irregularity.

Which of the following statement is not true regard to auditor s attendance at stock taking?

The primary objective of an auditor s observation of an entity s observation of an entity s stock take is to obtain direct knowledge that the stock and has been property counted

Auditor should attend physical stock taking only if inventory is material

Auditor may not attend physical verification of stock by management, if he does not find it appropriate to rely on it

If inventory is material, even when the auditor is not placing reliance on the physical verification by the management, he should attend it

The primary objective of an auditor s observation of an entity s observation of an entity s stock take is to obtain direct knowledge that the stock and has been property counted

The sequence of steps in the auditor s consideration of internal control is as follows

Perform tests of control, obtain and understanding, make a preliminary assessment of control risk, design

Obtain an understanding, design substantive test, perform tests of control, and make a preliminary assessment of control risk

Design substantive tests, obtain an understanding, perform tests of control, and make a preliminary assessment of control risk

Obtain an understanding, make a preliminary assessment of control risk, perform tests of control, design substantive procedures.

Perform tests of control, obtain and understanding, make a preliminary assessment of control risk, design

Shares issued for consideration other than cash should be vouched with help of

Contract with the party concerned

Internal Auditing Standards are issued by the

International Accounting Standard Board

Financial Accounting Standard Board

International Audit & Assurance Standard Board

The balance of cash in often between one to five percent of total assets. Tick the most appropriate statement with regard to verification of cash in context of this

No audit of cash is needed when, in auditor s opinion, cash is immaterial. Materiality is a relative concept

Cash in always material as materiality is qualitative concept

No audit of cash is needed when, in auditor s opinion, cash is immaterial. Materiality is a relative concept

The cash balance need only be audited if the balance is in overdraft

Cash is to be verified if control risk is assessed as high

Audit in depth means :

Intensive audit of each and every item.

The term Standard Auditing Practices refers

Auditing techniques adopted by auditor for collecting & vouching evidences

Balance sheet audit included verification of :

Income & expenditure accounts where appropriate.

Balance sheet does not include :

Verification of assets & liabilities.

Vouching of income & expense accounts related to assets and liabilities.

Examination of adjusting and auditing & closing entries.

When an independent auditor relies on the work of an internal auditor, he or she should

Examine the scope of internal auditor s work

Examine the system of supervising review and documentation of internal auditor s work

Adequacy of related audit programme

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

The objectivity and integrity of the auditor

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

The objectivity and integrity of the auditor

The independence of the source of evidence

Which of the following statements with regard to rules regarding exemption from branch audit is not true?

Cost consideration should be considered as an important factor/ground for exemption from branch audit

A branch office of a company can be granted exemption on the basis of quantum of activity criterion

If a satisfactory arrangement of scrutiny check of the books of account of a branch office of a manufacturing company has been made, it can be exempted from branch audit

Cost consideration should be considered as an important factor/ground for exemption from branch audit

The auditor should state in his audit report that branch office is exempted by virtue of quantum of activity or any other basis

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

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

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

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

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

He applies random sampling on data which is inaccurate and inconsistent

Which of the following would give the assurance that debtors mentioned on the date of balance sheet actually exist?

Sending debtor s confirmation letters

Reviewing subsequent collection

Verify debtors against sales document

140 + Mcqs in Auditing in Bachelor of Commerce (B Com) Page 3 McqOptions

101.	Verification is :
A.	The art of recording the business transactions.
B.	An examination of the books of accounts.
C.	The act of establishing the accuracy of entries in the books of accounts.
D.	none
Answer» D. none

102.	Thevacancy caused by resignation of an auditor is filled by
A.	Board of directors
B.	At the general meeting of shareholders
C.	By the central government
D.	By the company law board
Answer» C. By the central government

103.	The vacancy caused by resignation at a auditor is filled by
A.	Board of directors
B.	At the general meeting of shareholders
C.	By the central government
D.	By the company law board
Answer» C. By the central government

104.	Special audit is necessary for:
A.	Inefficient concern.
B.	Processing concern.
C.	Trading concern.
D.	Manufacturing concern.
Answer» B. Processing concern.

105.	The main object of investigation is :
A.	To discover errors and frauds.
B.	To prevent errors and frauds.
C.	To verify statements.
D.	All the above.
Answer» E.

106.	An auditor is like a :
A.	Watchman.
B.	Foolish dog.
C.	Mad dog.
D.	Watch dog.
Answer» E.

107.	Internal controls and internal check are :
A.	One and the same.
B.	Different.
C.	Internal control includes internal check.
D.	None of the above.
Answer» D. None of the above.

108.	Shares issued for consideration other than cash should be vouched with help of
A.	Directors minutes book
B.	Shareholders minute s book
C.	Contract with the party concerned
D.	Cash book
Answer» D. Cash book

109.	The company s auditor is expected to give:
A.	His expert opinion about the accounts.
B.	A factual position about the accounts.
C.	A critical review of the accounts.
D.	Financial assistance.
Answer» C. A critical review of the accounts.

110.	The audit that is made compulsory under the statute is called
A.	Statuary audit
B.	Partial audit
C.	Complete audit
D.	Continues audit
Answer» B. Partial audit

111.	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» D. Debenture holders.

113.	The independence of an internal auditor will most likely be assured if he reports to the
A.	President Finance
B.	President System
C.	Managing Director
D.	CEO
Answer» D. CEO

114.	A vacancy caused by resignation of an auditor is filled by :
A.	Board of directors.
B.	Managing director.
C.	General meeting.
D.	Central government.
Answer» D. Central government.

115.	A company auditor can be removed by :
A.	Board of directors.
B.	Managing director.
C.	Any director.
D.	General Meeting.
Answer» E.

118.	The overall attitude and awareness of an entity s board of directors concerning the importance of internal control is reflected in
A.	Accounting controls
B.	Control environment
C.	Control procedures
D.	Supervision
Answer» C. Control procedures

112.	Which of the following statements is not true with regard to teeming and lading ?
A.	It results in the deliberate misappropriation of cash receipts
B.	It is associated with cash receipts
C.	If same individual maintains cash receipts and cash payments teeming and lading is likely to exist
D.	To conceal the shortage, the defraud, usually, tries to keep bank and book amounts in daily agreement so that a bank reconciliation will not detect the irregularity.
Answer» D. To conceal the shortage, the defraud, usually, tries to keep bank and book amounts in daily agreement so that a bank reconciliation will not detect the irregularity.

116.	Which of the following statement is not true regard to auditor s attendance at stock taking?
A.	Auditor should attend physical stock taking only if inventory is material
B.	Auditor may not attend physical verification of stock by management, if he does not find it appropriate to rely on it
C.	If inventory is material, even when the auditor is not placing reliance on the physical verification by the management, he should attend it
D.	The primary objective of an auditor s observation of an entity s observation of an entity s stock take is to obtain direct knowledge that the stock and has been property counted
Answer» D. The primary objective of an auditor s observation of an entity s observation of an entity s stock take is to obtain direct knowledge that the stock and has been property counted

117.	The sequence of steps in the auditor s consideration of internal control is as follows
A.	Obtain an understanding, design substantive test, perform tests of control, and make a preliminary assessment of control risk
B.	Design substantive tests, obtain an understanding, perform tests of control, and make a preliminary assessment of control risk
C.	Obtain an understanding, make a preliminary assessment of control risk, perform tests of control, design substantive procedures.
D.	Perform tests of control, obtain and understanding, make a preliminary assessment of control risk, design
Answer» D. Perform tests of control, obtain and understanding, make a preliminary assessment of control risk, design

119.	According to Section ___ Special Audit is conducted at the central government
A.	Section 233(A)
B.	Section 233(B)
C.	Section 242(A)
D.	Section 242(B)
Answer» D. Section 242(B)

120.	This kind of audit is generally conducted between two annual audits.
A.	Internal audit
B.	Interim audit
C.	Final audit
D.	Continuous audit
Answer» C. Final audit

121.	Shares issued for consideration other than cash should be vouched with help of
A.	Directors minutes book
B.	Shareholders minute s book
C.	Contract with the party concerned
D.	Cash book
Answer» D. Cash book

122.	___ is documentary evidence by which the accuracy in the books of accounts may be proved.
A.	Cheque
B.	Receipt
C.	Voucher
D.	Statement
Answer» D. Statement

123.	Internal Auditing Standards are issued by the
A.	International Accounting Standard Board
B.	Financial Accounting Standard Board
C.	International Audit & Assurance Standard Board
D.	Auditing Practices Board
Answer» D. Auditing Practices Board

124.	In comparison to the independent auditor, an internal auditor is more likely to be concerned with
A.	Cost accounting system
B.	Internal control system
C.	Legal compliance
D.	Accounting system
Answer» C. Legal compliance

125.	The balance of cash in often between one to five percent of total assets. Tick the most appropriate statement with regard to verification of cash in context of this
A.	Cash in always material as materiality is qualitative concept
B.	No audit of cash is needed when, in auditor s opinion, cash is immaterial. Materiality is a relative concept
C.	The cash balance need only be audited if the balance is in overdraft
D.	Cash is to be verified if control risk is assessed as high
Answer» B. No audit of cash is needed when, in auditor s opinion, cash is immaterial. Materiality is a relative concept

Explore topic-wise MCQs in Bachelor of Commerce (B Com).

Verification is :

Thevacancy caused by resignation of an auditor is filled by

The vacancy caused by resignation at a auditor is filled by

Special audit is necessary for:

The main object of investigation is :

An auditor is like a :

Internal controls and internal check are :

Shares issued for consideration other than cash should be vouched with help of

The company s auditor is expected to give:

The audit that is made compulsory under the statute is called

Auditors of a joint stock company are appointed by :

Which of the following statements is not true with regard to teeming and lading ?

The independence of an internal auditor will most likely be assured if he reports to the

A vacancy caused by resignation of an auditor is filled by :

A company auditor can be removed by :

Which of the following statement is not true regard to auditor s attendance at stock taking?

The sequence of steps in the auditor s consideration of internal control is as follows

The overall attitude and awareness of an entity s board of directors concerning the importance of internal control is reflected in

According to Section ___ Special Audit is conducted at the central government

This kind of audit is generally conducted between two annual audits.

Shares issued for consideration other than cash should be vouched with help of

___ is documentary evidence by which the accuracy in the books of accounts may be proved.

Internal Auditing Standards are issued by the

In comparison to the independent auditor, an internal auditor is more likely to be concerned with

The balance of cash in often between one to five percent of total assets. Tick the most appropriate statement with regard to verification of cash in context of this

In comparison to the independent auditor an internal auditor is more likely to be concerned with

Audit in depth means :

Concurrent audit is a part of :

The term Standard Auditing Practices refers

Before the work of audit is commenced, the auditor plans out the whole of audit work is known as

Audit in depth is synonymous for:

Balance sheet audit included verification of :

Balance sheet does not include :

While observing a client s annual physical inventory, an auditor conducted test counts for certain test counts were higher than the recorded quantities in the client s perpetual records. This situation could be the result of the client s failure to record

When an independent auditor relies on the work of an internal auditor, he or she should

Before the work of audit is commenced, the auditor plans out the whole of audit work is called _________.

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

Which of the following statements with regard to rules regarding exemption from branch audit is not true?

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

Which of the following would give the assurance that debtors mentioned on the date of balance sheet actually exist?

126.	In comparison to the independent auditor an internal auditor is more likely to be concerned with
A.	Cost accountancy system
B.	Internal control system
C.	Legal compliance
D.	Accounting system
Answer» C. Legal compliance

127.	Audit in depth means :
A.	Audit of each and every item.
B.	Intensive audit of each and every item.
C.	Intensive audit of few items.
D.	Audit of a few selected items.
Answer» C. Intensive audit of few items.

128.	Concurrent audit is a part of :
A.	Internal check system.
B.	Continuous audit.
C.	Internal audit system.
D.	Final audit.
Answer» D. Final audit.

129.	The term Standard Auditing Practices refers
A.	Auditing techniques adopted by auditor for collecting & vouching evidences
B.	Test checking
C.	Standards of auditing
D.	True & fair view
Answer» B. Test checking

130.	Before the work of audit is commenced, the auditor plans out the whole of audit work is known as
A.	Audit plan
B.	Audit note
C.	Audit risk
D.	Audit program
Answer» E.

131.	Audit in depth is synonymous for:
A.	Complete audit.
B.	Completed audit.
C.	Final audit.
D.	Detailed audit.
Answer» E.

132.	Balance sheet audit included verification of :
A.	Assets.
B.	Liabilities.
C.	Income & expenditure accounts where appropriate.
D.	All of the above.
Answer» E.

133.	Balance sheet does not include :
A.	Verification of assets & liabilities.
B.	Vouching of income & expense accounts related to assets and liabilities.
C.	Examination of adjusting and auditing & closing entries.
D.	Routine checks.
Answer» E.

134.	While observing a client s annual physical inventory, an auditor conducted test counts for certain test counts were higher than the recorded quantities in the client s perpetual records. This situation could be the result of the client s failure to record
A.	Purchase returns
B.	Sales returns
C.	Goods with consignor
D.	Purchase discounts
Answer» C. Goods with consignor

135.	When an independent auditor relies on the work of an internal auditor, he or she should
A.	Examine the scope of internal auditor s work
B.	Examine the system of supervising review and documentation of internal auditor s work
C.	Adequacy of related audit programme
D.	all of the above
Answer» E.