1. An independent audit is important to readers of financial statements because it
Correct : C. Objectively examines and reports on management's financial statements.
2. The evidence available to auditor is _______ in nature, rather _______ in nature.
Correct : A. pervasive, conclusive
3. Compliance with the Standard of Auditing is the responsibility of
Correct : C. Auditor
4. An auditor is required to determine the ____ of his audit procedures according to the requirements of Standards of Auditing.
Correct : B. Nature ,timing and extent
5. The main object of an audit is
Correct : D. Depends on the type of Business
6. The audit process is
Correct : A. special application of the scientific method of inquiry.
7. Appropriateness means _______ of audit evidence.
Correct : B. Quality.
8. Professional judgment means a judgment taken by the auditor out of his ______
in an audit situation
Correct : C. Professional experience.
9. A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of _
Correct : B. Error of commission.
10. Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an
example of……………………..
Correct : A. Error of principle.
11. What is the main objectives of Auditing?
Correct : A. To give an opinion as to the truth and fairness of Financial statement.
12. Meaning of Interim Audit:
Correct : C. Audit for less than 12 months.
13. Internal Audit is conducted by :
Correct : A. Employees of an Organization.
14. Audit Evidence is obtained by:
Correct : D. All of the above.
15. Which Audit is conducted to check the cost records of the company?
Correct : D. Cost Audit
16. Which of the following is not a kind of audit?
Correct : D. None of these
17. This kind of audit is conducted generally between two annual audits.
Correct : B. Interim audit.
18. Voucher relates to ______.
Correct : D. All of the above.
19. Auditing begins where _____ends.
Correct : C. Accounting.
20. In the case of a company in which not less than _______% of the subscribed share capital is held whether singly or in combination by certain special institutions and bodies, the appointment or re-appointment of auditors shall be made at each annual general meeting by a special resolution.
Correct : A. 25%
21. Which of the following persons is qualified to be a company auditor?
Correct : D. A practicing-chartered accountant
22. When the auditor is an employee of the organization being audited, the audit is classified as _____
Correct : A. Internal
23. If there is capital loss, the auditor should
Correct : B. Allow payment of dividends
24. Auditor should see that amount received for premium on issue of shares should be
shown in ______
Correct : C. Share Premium account
25. Sec.143 of Companies Act 20913 deals with _____
Correct : A. Powers and rights of an auditor
26. Internal auditor is appointed by______
Correct : A. Management
27. ……………….is the medium through which an auditor expresses his opinion on the
state of affairs of the client’s business.
Correct : A. Audit report
28. ………………… is the specific guidelines and directions for efficient and effective
completion of the audit work on timely and daily basis, so as to minimise audit risk.
Correct : A. Audit planning
29. ……………….. is a method of organising the accounting system of a business concern or a factory by which the duties of various clerks are arranged in such a way that the work of one person is automatically checked by another.
Correct : B. Internal check
30. Internal check is a part of
Correct : D. Internal control
31. Civil liability of an auditor implies liability for
Correct : D. Misfeasance
32. If an auditor is not appointed at annual general meeting, he is appointed by the
Correct : A. The Central Government
33. The audit that is made compulsory under statute is called ________
Correct : A. Statutory audit
34. Audit means _______.
Correct : C. Examination of books, accounts or vouchers
35. When a transaction has not been recorded in the books of account either wholly or
partially such errors are called _______.
Correct : B. Error of omission
36. The liabilities of an auditor can be ________.
Correct : C. Civil & Criminal
37. Duties of an auditor is _______.
Correct : D. All of the above
38. Internal auditor of a company must be _______.
Correct : D. Need not possess any professional qualification
39. Sec.139 (7) provides that in the case of a Government Company or any other company owned or controlled by the Central Government, or by any State Government, the first auditor shall be appointed by _________
Correct : A. Comptroller and Auditor-General of India
40. Objectives of internal audit includes _________.
Correct : D. All of the above
41. Internal control includes ________.
Correct : C. Both internal audit and internal check
42. …………. is the examination of all documentary evidence which are available to
support the authenticity of transactions entered in the client’s records.
Correct : B. Vouching
43. Audit done by the employees of the business undertaking is called ______.
Correct : B. Internal audit
44. Which of the following is not a kind of audit?
Correct : D. None of the above
45. Effective internal check system reduces
Correct : B. Work of auditor
46. Misappropriation of goods may be checked by
Correct : B. Checking of employees
47. Internal check is suitable for _______.
Correct : A. Larger concerns
48. Final audit implies
Correct : D. Audit of accounts at the end of the year
49. Remuneration of an internal auditor is fixed by ______.
Correct : A. Management
50. The objective of the audit planning is ________
Correct : D. All of the above
51. Audit papers are the property of ______.
Correct : B. Auditor
52. Sole proprietary concerns are ______ to get their financial statements audited by
independent financial auditors.
Correct : B. Not legally required
53. The performance audit may be initiated by the organisation or by ____.
Correct : D. External interested parties
54. Balance sheet audit is also known as …………
Correct : D. Financial audit
55. …. lays out the strategies to be followed to conduct an audit.
Correct : A. An action plan
56. Auditor should determine the ______ and the timing of the audit report
Correct : D. Form
57. ……………..followed by the enterprise affect the audit plan.
Correct : C. Accounting and Audit policies
58. While framing an audit plan auditor should ascertain his _____ cast by various
legislations on him.
Correct : D. Term of appointment & responsibilities
59. An audit programme is a set of _______ which are to be followed for proper
execution of audit.
Correct : C. Instructions
60. Audit programme provides instructions to the audit staff and reduces scope for
Correct : C. Negligence
61. Audit programme helps in fixing the ______for the work done among the audit staff
as work done may be traced back to the individual staff members.
Correct : D. Responsibility
62. On completion of an audit _______serves the purpose of audit record which may be
useful for future reference.
Correct : A. Audit programme
63. Audit programme is prepared by _____
Correct : A. The auditor
64. The auditor has to obtain _______ to substantiate his opinion on the financial
statements.
Correct : D. Sufficient and appropriate evidence
65. The quality of information generated by the audited organization is directly related to
the strength of the organization’s ______
Correct : D. All of the above
66. _______ are the documents prepared or obtained by the auditors in connection with
the audit.
Correct : D. All of the above
67. Working papers helps in proper _______ of audit.
Correct : C. Planning and performance
68. The Auditors Working Papers are divided into two parts
Correct : A. Permanent audit file and current audit file
69. A statutory auditor-------- also as internal auditor of the company
Correct : B. Cannot act
70. A company auditor can be removed before expiry of his term by
Correct : A. Shareholders
71. A continuous audit is specially needed for
Correct : C. Banking companies
72. Propriety audit refers to
Correct : C. Enquiry against justification and necessity of expresses
73. Final audit implies
Correct : A. Audit of accounts at the end of the year
74. Management audit means
Correct : B. Evaluating performance of various management processes and functions
75. A special auditor is appointed by the
Correct : C. Central Government
76. A government Co. auditor may be appointed by the
Correct : A. C & A – G
77. Auditor should be dutiful like a
Correct : A. A watch dog
78. --------------- audit is forward looking –
Correct : B. Cost
79. Audit under any statute in a country is called ------------------
Correct : C. Statutory audit
80. -------------------- audit is not a statuary requirement
Correct : A. Management
81. ---------------- audit is compulsory for joint stock companies
Correct : A. Statutory
82. Deduction under section 80-HHE is related to :
Correct : A. Export of computer software, technical services outside India.
83. Form 3-CB is used for :
Correct : A. Truth and fairness of Accounts.
84. Deduction under section 35-D is related to:
Correct : A. Preliminary Expenses
85. Audit of a bank is generally conducted through:
Correct : C. Balance sheet audit
86. An auditor is liable for his annual audit of accounts o:
Correct : C. Owners
87. Which of the following is not true about opinion on financial statements?
Correct : C. He is responsible for detection and prevention of frauds and errors in financial statements
88. Auditing standards differ from audit procedures in that procedures relate to
Correct : B. acts to be performed
89. Which of the following is the most appropriate potential reaction of the auditor to his assessment that the risk of material misstatement due to fraud is high in relation to existence of inventory?
Correct : D. Perform analytical procedures.
90. An auditor who accepts an audit but does not possess the industry expertise
of the business entity should
Correct : A. engage experts
91. Audit in depth is synonymous for
Correct : B. Completed audit
92. Which of the following statements is, generally, correct about the
reliability of audit evidence?
Correct : C. Evidence obtained from outside sources routed through the client
93. When is evidential matter, generally, considered sufficient?
Correct : B. When it is enough to provide a basis for giving reasonable assurance regarding truthfulness
94. For what minimum period should audit working papers be retained by audit firm?
Correct : C. For a period auditor opines them to be useful in servicing the client
95. Who is responsible for the appointment of statutory auditor of a limited company
?
Correct : B. Members of the company.
96. Which of the following sections deal with qualifications of the auditor ?
Correct : A. Section 226 (1) and section 226(2).
97. Which of the following statement is not true?
Correct : C. Majority of the partners should be practicing in India.
98. As per the requirements of section 226(3) and 226(4) a person is disqualified
from being appointed as a statutory auditor if he holds………………
Correct : D. Security carrying voting rights of the company.
99. The board of directors shall appoint first auditor of a company.
Correct : D. With in one month of incorporation of the company.
100. The term of the auditor ship of first auditor would be from the date of appointment
till………………………….
Correct : B. the conclusion of first annual general meeting.