1. Scope paragraph is .

(a) describing the nature of an audit (b) is a reference to the auditing standards (c) a description of the work performed by the auditor (d) all of the above 2. "Scope" ISA 200A refers to the . (a) auditors ability (b) directors ability (c) partners ability (d) employees ability 3. The date of auditors report on the financial statements is the . (a) date on which the auditor signs (b) date of the financial statements (c) date of submission of the statements to the client (d) date of submission of the statements to the required parties 4. Where the firm is appointed as the auditor, the report should be signed in the . (a) personal name of the auditor (b) personal name of the auditor and in the name of the audit firm (c) personal name of the auditor or in the name of the audit firm (d) name of the audit firm 5. The report should name specific location, which is ordinarily the city where the. (a) audit report is signed (b) audit report is prepared (c) operations of the company takes place (d) head office of the company is located 6. The main object of an audit is . (a) expression of opinion (b) detection and prevention of fraud and error (c) both a and b (d) depends on the type of audit 7. The title of ISA 200A issued by Council of ICAI is . (a) objective and scope of the Financial Statements (b) objective and scope of the Audit of Financial Statements (c) objective and scope of Business of an Entity (d) objective and scope of Financial Statements Audit 8. Which of the following is not true about auditors duty? (a) The auditor should express an opinion on financial statements (b) His opinion is no guarantee to future viability of business (c) He is responsible for detection and prevention of frauds and errors in financial statements

(d) He should examine whether recognized accounting principals have been consistently followed 9. A sales of USD.100,000 to A was entered as sales to B. This is an example of . (a) error of omission (b) error of commission (c) compensating error (d) error of principle 10. Goods sent on approval" have been recorded as "Credit Sales. This is an example of . (a) error of omission (b) error of commission (c) error of Principle (d) error of duplication 11. Which of the following statements is not true ? (a) Management fraud is more difficult to detect than employee fraud (b) Internal control system reduces the possibility of occurrence of employee fraud and management fraud (c) The auditors responsibility for detection and prevention of errors and frauds is similar (d) all statements are correct 12. As per ISA 240 if auditor detects an error then . (a) he should inform the management (b) he should communicate it to the management if it is material. (c) the auditor should ensure financial statements are adjusted for detected errors (d) both b and c 13. Which of the following is not limitation of audit? (a) Objectivity of auditors judgment (b) Selective testing (c) Persuasiveness of evidence (d) Limitations of internal control system 14. How many principles are listed in ISA 200 which govern auditors professional obligation? (a) Seven (b) Eight (c) Nine (d) Fourteen 15. Goods sent on approval" have been recorded as "Credit Sales. This is an example of. (a) error of omission

(b) error of commission (c) error of Principle (d) error of duplication 16. Which of the following statements is not true ? (a) Management fraud is more difficult to detect than employee fraud (b) Internal control system reduces the possibility of occurrence of employee fraud and management fraud (c) The auditors responsibility for detection and prevention of errors and frauds is similar (d) all statements are correct 17. As per ISA 240 if auditor detects an error then . (a) he should inform the management (b) he should communicate it to the management if it is material. (c) the auditor should ensure financial statements are adjusted for detected errors (d) both b and c (e) (f) (g) (h) (i) (j) kepticism requires that the auditor assume that management is . Management is reasonably honest Neither honest nor dishonest Not necessarily honest Dishonest unless proved otherwise

18. balance sheet audit is synonymous to . (a) annual audit (b) continuous audit (c) detailed audit (d) statutory audit 19. Audit in depth is a synonymous for . (a) complete audit (b) completed audit (c) final audit (d) detailed audit 20. Balance audit includes verification of . (a) assets (b) liabilities (c) income and expense accounts where appropriate (d) All of the above

21. Which of the following statements is not true about continuous audit ? (a) it is conducted at regular or irregular interval. (b) it may be carried out on a daily basis. (c) it is needed when the organisation has a good internal control system (d) it is expensive . 22. Balance sheet does not include (a) verification of assets and liabilities (b) vouching of income and expense accounts related to assets and liabilities. (c) examination of adjusting and closing entries. (d) routine checks 23. Which of the following auditing and assurance standard deals with audit planning ? (a) ISA-700 (b) ISA-800 (c) ISA-290 (d) ISA-300 24. Audit programme is prepared by . (a) the auditor (b) the client (c) the audit assistants (d) the auditor and his audit assistants 25. The audit engagement letter, generally, should include a reference to each of the following except . (a) limitations of auditing (b) responsibilities of management with respect to audit work (c) expectation of receiving a written management representation letter (d) a description of the auditors method of sample selection 26. The use of an audit engagement letter is the best method of assuring the auditor will have which of the following . (a) auditor will obtain sufficient, appropriate audit evidence (b) management representation letter (c) access to all books, accounts, and vouchers required for audit purpose (d) cooperation from other auditors 27. Of the following , which is the best persuasive type of audit evidence ? a) Bank statements obtained from the client b) Documents obtained by auditor from third parties directly

c) Carbon copies of sales invoices inspected by the auditor d) Computation made by the auditor 28. Which of the following statements is, generally, correct about the reliability of audit evidence ? (a) To be reliable, evidence should be conclusive rather than persuasive (b) Effective internal control system provides reliable audit evidence (c) Evidence obtained from outside sources routed through the client (d) All are correct

29. Which of the following factors is most important in determining the appropriations of audit evidence ? (a) The reliability of audit evidence and its relevance in meeting the audit objective (b) The objectivity and integrity of the auditor (c) The quality of audit evidence (d) The independence of the source of evidence 30. When it is enough to provide a basis for giving reasonable assurance regarding Truthfulness and fairness of financial statements. (a) When it is objective and relevant (b) When auditor Collects and evaluates it independently. 31. Which of the following is not corroborative evidence? (a) Minutes of meetings (b) Confirmations from debtors (c) Information gathered by auditor through observation (d) Worksheet supporting consolidated financial statements. 32. "Audit Evidence" states the . (a) involvement of the accountant (b) credibility of the company (c) trust worthiness of the management (d) reliability of audit evidence influenced by its source and nature 33. Which of the following is not an analytical procedure ? (a) Tracing of purchases recurred in the purchase book to purchase invoices. (b) Comparing aggregate wages paid to number of employees (c) Comparing the actual costs with standard costs (d) All of them are analytical procedure 34. Which of the following affects audit effectiveness ?

(a) (b) (c) (d)

Risk of over reliance Risk of incorrect Risk of incorrect acceptance Both (a) and ( c)

. 35. Which of the following is not an inherent limitation of internal control system? (a) Management override (b) Collusion among employees (c) Inefficiency of internal auditor (d) Abuse of authority 36. An auditor should study and evaluate internal controls to . (a) determine whether assets are safeguarded (b) Suggest improvements in internal control (c) Plan audit procedures (d) Express an opinion 37. State whether the following statements are true or false: (a) Auditing is critical examination of books of account with a view to establish their accuracy and correctness. (b) Auditing of accounts is compulsory in a registered partnership firm. (c) Auditing of accounts is optional in case of private limited company (d) Audit may be said to be the verification of the accuracy and correctness of the books of accounts by an independent person qualified for the job and not in any way connected with the preparation of such accounts (e) The primary aim of auditing of accounts is to detect errors and frauds in the books of account. (f) Audited financial statements are free from all sorts of errors and frauds. (g) Compensating errors do not affect the balance sheet of the company, as their presence does not affect the agreement of trail balance. (h) An auditor who does not compromise on matters of considerable importance with the board of directors is known as independent auditor. (i) The ultimate responsibility for detection and prevention of errors and frauds rests with auditor. (j) Incorrect total of ledgers accounts is an example of errors of principle. 38. Which of the following best describe the primary objective of an independent financial auditor? (a) Detection and prevention of frauds (b) Detection and prevention of errors

(c) Both (a) and (b) (d) Expression of independent opinion by the auditor about the truth and fairness of financial information examined by him 39. What is a clean or unqualified report? (a) That the internal control over financial statement are effectiveness (b) The financial statement are fair representation of the company economic issues (c) Both a & b (d) All the above 40. Why is auditing described as systematic process? (a) It involves a plan of action (b) Specific steps to achieve an outcome (c) Both a & b (d) All the above 41. What is difference between financial statement errors and financial statement frauds (a) the unintentional presentation of improper financial statements (b) A lack of understanding of the accounting standards (c) is the intentional presentation of misleading financial statements (d) Misappropriation of assets (e) All the above 42. Why do the shareholder value the audited financial statement? (a) the audit provides assurance about what management has reported as the companys performance and financial position, (b) they use financial information to make investment decisions, (c) even though the financial statements are not the only source of information they are important and often confirm or validate that other information available to the sock markets is legitimate and credible, (d) it gives them more confidence that the information they are using for investment decisions is reliable. (e) All the above 43. What is an assurance engagement? (a) A service that adds value to information (b) activities add credibility to information or change its presentation. (c) Free material misstatement (d) Statutory audit (e) All the above 44. How does the auditor obtain an information about the client for initial planning? (a) Information gathered in the clients acceptance or continuous process (b) Understand the management information systems

(c) Understand the accounting information systems (d) Documentation created about the management for its assessment (e) All the above 45. What are audit planning and risk assessment considered together, early in the audit? (a) the audit team obtains information about the nature of a clients business, (b) important transactions and accounting information system (c) including internal control over financial reporting, it can make preliminary decisions about the audit procedures necessary (d) The procedures are planned to target the risks of the client, which can be important accounts, characteristics and weaknesses (e) the preliminary audit plan can be designed with audit procedures to collect evidence on those important areas. (f) All the above.