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This set of Practical Auditing Multiple Choice Questions & Answers (MCQs) focuses on Practical Auditing Set 1

Q1 | Auditing refers to
  • Preparation and checking of account
  • Examination of accounts of business units only
  • Examination of accounts of professional accountants
  • Checking of vouchers
Q2 | Main object of auditing is
  • Detection of errors
  • To find out whether P&L a/c & B/S show true and fair state affairs
  • Detection of frauds
  • Detection and prevention of frauds and errors.
Q3 | Auditing is luxury for a
  • Joint stock company
  • Partnership firm
  • Small shop-keeper
  • Government company
Q4 | Auditing is compulsory for
  • Small scale business enterprises
  • All partnership firms
  • All joint stock companies
  • All proprietary concerns
Q5 | Propriety audit refers to
  • Verification of accounts
  • Examination accounts of propriety concerns
  • Enquiry against justification and necessity of expresses
  • Audit of Govt. companies
Q6 | Propriety is normally undertaken in case of
  • Joint stock company
  • Government company
  • Statutory corporation
  • Govt. departments
Q7 | Interim audit refers to
  • Examination of accounts continuously
  • Examination of accounts intermittently
  • Audit work to find out and check interim profits of a company
  • Carrying on audit for bonus purposes at the end of the year
Q8 | Final audit implies
  • Audit of accounts at the end of the year
  • Finally checking of accounts to reveal frauds
  • Audit for submitting report immediately at the end of the year
  • Audit of banking companies
Q9 | A continuous audit is specially needed for
  • Any trading concern
  • Smaller concerns
  • Banking companies
  • Any manufacturing companies
Q10 | Joint audit implies
  • Audit of two concerns together
  • Audit of joint stock companies
  • Audit of joint sector companies
  • Audit by two firms of C.A
Q11 | Management audit means
  • Audit undertaken on behalf of the management
  • Evaluating performance of various management processes and functions
  • Audit undertaken on behalf of Govt. to punish management
  • Compulsory audit
Q12 | Systems audit implies
  • Systematic examination of accounts
  • Audit undertaken to improve auditing systems
  • Enquiring accounting and control systems
  • Checking the performance of management
Q13 | Internal audit means
  • Audit undertaken to ascertain truth and fairness of state of affairs
  • Audit undertaken internally to evaluate management functions
  • Audit undertaken by employees of the organization to check financial irregularities
  • Audit by independent auditor to improve internal affairs
Q14 | Internal audit is
  • Compulsory for a company with paid-up capital of Rs. 25 lakh and above
  • Voluntary for a company
  • Not necessary for a company
  • Necessary for a company
Q15 | Internal audit is undertaken
  • By independent auditor
  • Statutorily appointed auditor
  • By a person appointed by the management
  • By Government auditor
Q16 | Internal auditor is appointed by the
  • Management
  • Shareholders
  • Government
  • C & A-G
Q17 | The object of internal check is to
  • Control wastage of resources
  • Prevent errors and frauds
  • Verify the cash receipts and payments
  • Facilitate quick decision by the management
Q18 | Effective internal check system reduces
  • The liability of auditor
  • Work of auditor
  • Both work as well as auditor
  • Responsibilities of an auditor
Q19 | Internal check is a part of
  • Internal audit
  • Internal accounting
  • External audit
  • Internal control
Q20 | Internal check is carried on by
  • Special staff
  • Internal auditor
  • Accountant
  • None of the above
Q21 | Internal check is suitable for
  • Larger concerns
  • Smaller concerns
  • Petty shop- keepers
  • None of the above
Q22 | Internal check is carried on by
  • Staff specially appointed for the purpose
  • Internal auditor
  • The members of the staff among themselves
  • Supervisor of the staff
Q23 | Internal check is essential for
  • Petty traders
  • Cash transactions in a large concern
  • A concern using automatic equipments
  • None of the above
Q24 | Misappropriation of goods may be checked by
  • Proper supervision over stock
  • Checking of employees
  • Punishment of employees
  • None of the above
Q25 | Window dressing implies
  • Curtailment of expenses
  • Checking wastages
  • Under- valuation of assets
  • Over- valuation of assets