T.Y B.COM
SEMESTER - 5
MID SEMESTER EXAMINATION
AUDIT & ASSURANCE
MCQs - OCTOBER 2018
1. Which of the following is not an advantage of the preparation of working papers?
I. To provide a guide for advising another client on similar issues
II. To provide a basis for subsequent audits
III. To help in preparation of daily accounting work
IV. To ensure that employee records the transactions timely
A. I, II, IV
B. II, III
C. I, III, IV
D. II, IV
2. Record of communication with regards to disbursement of loan including regards to disbursement of loan including terms and conditions for sanctioning of loaf for tenure of 10 years are documented in
A. Audit note book
B. Audit Working papers
C. Current audit file
D. Permanent audit file
3. Which of the following is/are incorrect?
I. internal auditor need not be a chartered accountant
II. Internal auditor is always an employee of the organization
III. Internal auditor reports to the management
A. I, III
B. II,III
C. I, II
D. II
4. As per SA 240 the primary responsibility for the prevention and detection of fraud rests with _______
I. Auditor
II. Management
III. Those charges with governance of entity
IV. Audit assistant
A. II, III
B. I, II, III
C. I
D. III, IV
5. An Audit programme is
A. list of the power to be used by auditor.
B. Guidance to the audit team as to the work to be performed.
C.A device to facilitate the audit of computer system
D. The record on which balance sheet to be summarised by the auditor.
6. Audit evidence is defined as _______ used by the auditors in arriving at the conclusions on which the auditor's opinion is based.
A. information
B. retiring auditor's communication
C. Management Communication
D. Letter
7. Which of the following statements is/are true or false about continuous audit?
I. It is conducted at regular/irregular intervals throughout the year.
II. It is carried throughout the year.
III. It shall be carried out by the internal auditor only.
IV. It is expensive.
A. True, True, False, True
B. False, True, False, False
C. True, False, True, True
D. False, True, True, False
8. Current working paper file relating to audit of a partnership fim will contain
I. Confirmation from the bank for the balance of fixed deposit
II. Copy of partnership deed
III. Analysis of transactions and balances
IV. Organisational structure of the client
A. I, IV
B. II, IV
C. II, III
D. I, III
9. The auditor should obtain _______ audit evidence for the purpose of expressing an opinion.
A. sufficient and appropriate
B. External
C. internal and periodical
D. Legal and relevant
10. What is/ are the advantages of audit
I. Settlement of disputes
II. Keeps accounts department vigilant
III. Regret in processing of loan by the bankers
IV. Acceptability by the authorities
A. I, II, III, IV
B. I, II, IV
C. III, IV
D. I, II, III
11. Fortune private limited commences the trading business and have turnover
Rs. 2,15,00,000 for the year 2017-18 Out of the following, which of the types of audit is/are mandatorily applicable?
I. Social Audit
II. Tax Audit
III. Statutory Audit
IV. Energy Audit
A. II, III
B. III
C. III, IV
D. I, II, III
12. ______ is a process to examine the effect-good or bad-of the operation of an enterprise with its surroundings.
A. Interim Audit
B. Cost Audit
C. Energy Audit
D. Environmental Audit
13. Labor charges paid at the time of installation of Plant and Machinery debited to repairs and maintenance account. This is error of
A. Principles
B. Commission
C. Compensating
D. Omission
14. Which of the following is/are the basic principles governing audit?
I. Confidentiality
II. Planning
III. Skill and competence
IV. Documentation
A. I, II, III, IV
B. I, III, IV
C. I, IV
D. II, IV
15. Financial statements of an entity need to be prepared in accordance with
I. Accounting standards issued by the Institute of Chartered Accountants of India
II. Approval of auditor only.
II. Guidance Notes issued by the Institute of Chartered Accountants of India
IV. Relevant statutory requirements
A. I, II, III, IV
B. I, III, IV
D. I, IV
C. II, IV
16. Consider and determine the following stages, an auditor has to undergo for planning of an audit.
I. Acquiring the knowledge of Accounting and Internal Control System
II. Acquiring the knowledge about business of his client
III. Determine the degree of reliance to be place on the internal control system
IV. Determine the nature, timing and extent of audit procedures
A. I, II, III, IV
B. II, I, III, IV
C. I, III, II, IV
D. III, I, IV, II
17. Who is the custodian authority for the audit working papers?
A. Board of Directors
B. Audit assistants and not auditor
C. Employee of the clients
D. Auditor
18. _______ represents audit evidence obtained by the auditor as a direct written response to the auditor from a third party.
A. External confirmation
B. Reperformance
C. Inquiry
D. Analytical Procedure
19. Which of the following is not an advantage of audit programme.
A. The audit work may become too mechanical
B. Uniformity in the performance of audit work is ensured
C. Progress of the work can be examined periododically
D. The responsibility for negligence can be fixed
20. Which of the following is/are not advantage/s of Continuous Audit.
I. Early detection of frauds and errors
II. Auditor is able to understand the technicalities of the business
III. Likely collusion between client's staff and auditor's staff
IV. It acts as a moral check on the staff of the client.
A. II, III
B. II, III, IV
C. II
D. III
21. The audit notebook is maintained by ______
A. audit assistants
B. accountants
C. Auditor himself only.
D. All of the above
22. Match the following
|
1. |
Standard on Auditing |
1. |
Apply on agreed upon procedures other than historical financial information |
|
2. |
Standard on Review
Engagements |
2. |
Review of historical financial Information |
|
3. |
|
3. |
Audit of historical financial information |
A. 1 - II, 2 - III
B. 1 - III, 2 - II
C. 1 - II , 2 - III
D. 1 - III, 2 - I
23. As per SA 230 _________ is one or more folders or other storage media, in physical or electronic form, containing the records that comprise the audit documentation for a specific engagement.
A. Audit File
B. Audit working papers
C. Audit engagement letter
D. Audit Notebook
24. Match the following -
|
1. |
Inspection |
I. |
Checking mathematical
accuracy |
|
2. |
Observation |
2. |
Looking at the process
and procedures |
|
3. |
Inquiry |
1. |
Examining records and
documents |
|
|
|
3. |
Seeking information of
knowledgeable persons |
A. 1 – Ill, 2 – lV, 3 – Il
B. 1 – Il, 2 – Ill, 3 – I
C. 1 – Ill, 2 – Il, 3 – IV
D. 1 – I, 2 – Ill, 3 – IV
25. _________ are such errors the existence of which becomes apparent in the process of compilation of accounts.
A. Self-revealing errors
B. Error of duplication
C. Error of omission
D. B and C
26. As per SA 240, a financial audit is conducted by the auditor to obtain _______ that the financial statements are free from material misstatement caused by fraud and/or error.
A. true and correct opinion
B. reasonable opinion
C. correct opinion
D. absolute opinion
27. Audit working papers refers to all the documents, _______ relating to primarily to set of accounts being audited.
A. gathered from internal parties.
B. gathered from external parties.
C. Prepared and gathered by management.
D. Prepared and gathered by auditor.
28. The form, content and extent of working papers depends on factors such as
I. The significance of the audit evidence obtained
II. The size and complexity of the entity.
III. The nature audit procedures to be performed
A. I, III
B. II III
C. I, II, III
D. I, II
29. Consider the following documents
1. Audit notebook
2. Audit report
3. Audit programme
4. Audit appointment Letter
What is the correct sequence in which the above documents are prepared?
A. 1,2,3,4
B. 4,3,1,2
C. 3,1,4,2
D, 2,3,1,4
30. Permanent working paper file normally includes
I. Bank Reconciliation Statement
II. Confirmation received from the client
III. Notes regarding significant accounting policies
IV. Description of the type of business carried on
A. I, III
B. III, IV
C. I, II
D. II, IV
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