Auditing Set 2

Bachelor of Commerce (B Com),

Staff Selection Commission (SSC)

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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
Answer: Watch dog
Q2 | The term ‘Audit’ is derived from a Latin word “audire” which means;
  • To inspect
  • To examine
  • To hear
  • To investigate
Answer: To hear
Q3 | Process of verifying the documentary evidences of transactions are known as:
  • Auditing
  • Testing
  • Vouching
  • Verification
Answer: Vouching
Q4 | Auditing is compulsory for
  • Small scale business
  • Partnership firms
  • Joint stock Companies
  • Proprietary Concerns
Answer: Joint stock Companies
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.
Answer: 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
Answer: Lapping
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
Answer: Objective and Scope of the Audit of Financial Statements
Q8 | Lapping is also known as:
  • Teeming and lading
  • Embezzlement
  • Looping
  • Hacking
Answer: Teeming and lading
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
Answer: He is responsible for detection and prevention of frauds and errors in financial statements
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
Answer: Error of commission
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
Answer: Error of principle
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.
Answer: Internal control system reduces the possibility of occurrence of employee fraud and management fraud
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)
Answer: 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.
Answer: Objectivity of auditor’s judgment
Q15 | Internal audit is undertaken
  • By independent auditor
  • Statutorily appointed auditor
  • By a person appointed by the management
  • By a government auditor
Answer: By a person appointed by the management
Q16 | The scope of internal audit is decided by the :
  • Shareholders
  • Management
  • Government
  • Law
Answer: Management
Q17 | Audit of banks is an example of –
  • Statutory audit
  • Balance sheet audit
  • Concurrent audit
  • All of the above
Answer: All of the above
Q18 | Concurrent audit is a part of
  • Internal check system
  • Continuous audit
  • Internal audit system
  • None
Answer: Internal audit system
Q19 | In India, balance sheet audit is synonymous to
  • Annual audit
  • Continuous audit
  • Detailed audit
  • Statutory audit
Answer: Annual audit
Q20 | Audit in depth is synonymous for
  • Complete audit
  • Completed audit
  • Final audit
  • Detailed audit
Answer: Detailed audit
Q21 | Institute of Chartered Accountants of India was established
  • 1956
  • 1949
  • 1956
  • 1948
Answer: 1949
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
Answer: It is needed when the organization has a good internal control system
Q23 | Internal check is carried on by
  • Staff specially appointed for the purpose
  • Internal auditor
  • Supervisor of the staff
  • Members of the staff
Answer: Members of the staff
Q24 | Errors of Omission are
  • Technical errors
  • Errors of principle
  • Compensating errors
  • None of the above
Answer: Technical errors
Q25 | Window dressing implies:
  • Curtailment of expenses
  • Checking of Wastages
  • Under valuation of assets
  • Over Valuation of assets
Answer: Over Valuation of assets
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