Auditing Set 2
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This set of Auditing Multiple Choice Questions & Answers (MCQs) focuses on Auditing Set 2
Q1 | An auditor is like a
- Blood haunt
- Watch dog
- May both according to situation
- None of these
Q2 | The term ‘Audit’ is derived from a Latin word “audire” which means;
- To inspect
- To examine
- To hear
- To investigate
Q3 | Process of verifying the documentary evidences of transactions are known as:
- Auditing
- Testing
- Vouching
- Verification
Q4 | Auditing is compulsory for
- Small scale business
- Partnership firms
- Joint stock Companies
- Proprietary Concerns
Q5 | The main object of an audit is ___
- Expression of expert opinion
- Detection and Prevention of fraud and error
- Both (a) and (b)
- Depends on the type of audit.
Q6 | Concealment of shortage by delaying the recording of cash receipts is known as
- Embezzlement
- Misappropriation
- Lapping
- None of these
Q7 | The title of AAS2 issued by Council of ICAI is ___
- Objective and Scope of the Financial Statements
- Objective and Scope of the Audit of Financial Statements
- Objective and Scope of Business of an Entity
- Objective and Scope of Financial Statements Audit
Q8 | Lapping is also known as:
- Teeming and lading
- Embezzlement
- Looping
- Hacking
Q9 | Which of the following is not true about opinion on financial statements?
- The auditor should express an opinion on financial statements.
- His opinion is no guarantee to future viability of business
- He is responsible for detection and prevention of frauds and errors in financial statements
- He should examine whether recognised accounting principle have been consistently
Q10 | A sale of Rs. 25,000 to A was entered as a sale to B. This is an example of _
- Error of omission
- Error of commission
- Compensating error
- Error of principle
Q11 | ‘Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an exampleof _
- Error of principle
- Error of commission
- Error of omission
- Error of duplication
Q12 | Which of the following statements is not true?
- Management fraud is more difficult to detect than employee fraud
- Internal control system reduces the possibility of occurrence of employee fraud and management fraud
- The auditor’s responsibility for detection and prevention of errors and frauds is similar.
- All statements are correct.
Q13 | As per AAS4, if auditor detects an error then –
- He should inform the management.
- He should communicate it to the management if it is material
- The auditor should ensure financial statements are adjusted for detected errors.
- Both (b) and (c)
Q14 | Which of the following is not a limitation of audit as per AAS4?
- Objectivity of auditor’s judgment
- Selective testing
- Persuasiveness of evidence
- Limitations of internal control system.
Q15 | Internal audit is undertaken
- By independent auditor
- Statutorily appointed auditor
- By a person appointed by the management
- By a government auditor
Q16 | The scope of internal audit is decided by the :
- Shareholders
- Management
- Government
- Law
Q17 | Audit of banks is an example of –
- Statutory audit
- Balance sheet audit
- Concurrent audit
- All of the above
Q18 | Concurrent audit is a part of
- Internal check system
- Continuous audit
- Internal audit system
- None
Q19 | In India, balance sheet audit is synonymous to
- Annual audit
- Continuous audit
- Detailed audit
- Statutory audit
Q20 | Audit in depth is synonymous for
- Complete audit
- Completed audit
- Final audit
- Detailed audit
Q21 | Institute of Chartered Accountants of India was established
- 1956
- 1949
- 1956
- 1948
Q22 | Which of the following statements is not true about continuous audit?
- It is conducted at regular interval
- It may be carried out on daily basis
- It is needed when the organization has a good internal control system
- It is expensive
Q23 | Internal check is carried on by
- Staff specially appointed for the purpose
- Internal auditor
- Supervisor of the staff
- Members of the staff
Q24 | Errors of Omission are
- Technical errors
- Errors of principle
- Compensating errors
- None of the above
Q25 | Window dressing implies:
- Curtailment of expenses
- Checking of Wastages
- Under valuation of assets
- Over Valuation of assets