Auditing MCQS Notes

Muhammad Mustafa MBA from uos and also Digital Marketing certify
Auditing MCQS
1. Audit of banks is an example of – a) Statutory audit b) Balance sheet audit c) Concurrent audit
d) Both (a) and (b) e) All of the above
2. Concurrent audit is a part of a) Internal check system b) Continuous audit c) Internal audit
system d) None
3. In India, balance sheet audit is synonymous to a) Annual audit b) Continuous audit c) Detailed
audit d) Statutory audit
4. Audit in depth is synonymous for a) Complete audit b) Completed audit c) Final audit
d) Detailed audit
5. Balance sheet audit includes verification of_ a) Assets b) Liabilities

c) Income and expense accounts where appropriate d) All of the above
6. Which of the following statements is not true about continuous audit?

a) It is conducted at regular interval b) It may be carried out on daily basis
c) It is needed when the organization has a good internal control system
d) It is expensive
7. Which of the following is not a fact of EPA?

a) Economic audit b) Efficiency audit c) Expenditure audit d) Effectiveness audit
8. The Delhi Government had constructed six bungalows for its ministers. They are lying
unoccupied for last three years. This would be a matter of concern for a) Propriety Auditor b)
Performance Auditor c) Financial Auditor d) None of the above
9. Financial auditor is not concerned with propriety of business transactions. However, the
exceptions to this rule are contained for audit of limited companies in_
a) Section 227 (IA) of the Companies Act, 1956
b) Section 227 (IA) and section 227(4A) of the Act
c) CARO, 2003 d) Section 227 (IA) and CARO, 2003
10.Balance sheet does not includea) 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
Contact no +923457963314 Email Address kamal786412@gmail.com

11.Which of the following statements is not correct about materiality?

a) Materiality is a relative concept
b) Materiality judgments involve both quantitative and qualitative judgments
c) Auditor’s consideration of materiality is influenced by the auditor’s perception of the needs
of an informed decision maker who will rely on the financial statements
d) At the planning state, the auditor considers materiality at the financial statement level
only
12.…..the audit risk,….. the materiality and ……the audit effort

a) Lower, Higher, Lower b) Lower, Lower, Higher
c) Higher, Lower, Lower d) Lower, Higher, Higher
13.When issuing unqualified opinion, the auditor who evaluates the audit findings should be
satisfied that the
a) Amount of known misstatement is documented in working papers
b) Estimates of the total likely misstatement is less than materiality level
c) Estimate of the total likely misstatement is more than materially level
d) Estimates of the total likely misstatement cannot be made
14. In determining the level of materiality for an audit, what should not be considered?
a) Prior year’s errors b) The auditor’s remuneration
c) Adjusted interim financial statements d) Prior year’s financial statements
15. Analytical procedures issued in the planning stage of an audit, generally

a) helps to determine the nature, timing and extent of other audit procedures
b) directs attention to potential risk areas
c) indicates important aspects of business d) All of the above
16.Which of the following statements is most closely associated with analytical procedure
applied at substantive stage?
a) It helps to study relationship among balance sheet accounts
b) It helps to discover material misstatements in the financial statements
c) It helps to identify possible oversights
d) It helps to accumulate evidence supporting the validity of a specific account balance
17.For all audits of financial statements made in accordance with AAS14, the use of analytical
procedures is at the discretion of the auditor in which stage?
a) Substantive testing b) Planning stage c) Overall review stage d) All of the above
18.The basic assumption underlying the use of analytical procedures is :

a) It helps the auditor to study relationship among elements of financial information

b) Relationship among data exist and continue in the absence of known condition to the
contrary
c) Analytical procedures will not be able to detect unusual relationships
d) None of the above.
19.What are analytical procedures?

a) Substantive tests designed to assess control risk
b) Substantive tests designed to evaluate the validity of management’s representation letter
c) Substantive tests designed to study relationships between financial and nonfinancial
d) All of the above
20.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
21.When applying analytical procedures, an auditor could develop independent estimate of an

account balance to compare it to a) client’s unedited account balance
b) client’s unedited account balance adjusted for trends in the industry
c) Prior year audited balance
d) Prior year audited balance adjusted for trends in the industry
22.What is the primary objective of analytical procedures used in the overall review stage of an
audit?
a) To help to corroborate the conclusions drawn from individual components of financial
statements
b) To reduce specific detection risk
c) To direct attention to potential risk areas
d) To satisfy doubts when questions arise about a client’s ability to continue
23. Of the following, which is the least 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) Computations made by the auditor
24. Which of the following statements is, generally, correct about the reliability of audit
evidence?
a) To be reliable, evidence should 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.
25. In an audit of financial statements, substantive tests are audit procedures that __ a) may be
eliminated for an account balance under certain conditions
b) are designed to discover significant subsequent events
c) will increase proportionately when the auditor decreases the assessed level of control risk
d) may be test of transactions, test of balance and analytical procedures
26. The nature, timing and extent of substantive procedures is related to assessed level of
control risk
a) randomly b) disproportionately c) directly d) inversely
27. 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 quantity of audit evidence d) The independence of the source of evidence
28. When is evidential matter, generally, considered sufficient?

a) When it constitutes entire population
b) When it is enough to provide a basis for giving reasonable assurance regarding
truthfulness
c) When it is objective and relevant
d) When auditor collects and evaluates it independently
29. Which of the following is not a corroborative evidence?

a) Minutes of meetings b) Confirmations from debtors
c) Information gathered by auditor through observation
d) Worksheet supporting consolidated financial statements
30. Which of the following statements is not true with respect to management representations
obtained as per AAS11?
a) Authenticated copy of relevant minutes of meetings may be regarded as management
representation
b) It should always be in working
c) It may be dated prior to the report date d) It should be addressed to the auditor
Auditing MCQS
1. Audit of banks is an example of – a) Statutory audit b) Balance sheet audit c) Concurrent audit
d) Both (a) and (b) e) All of the above

2. Concurrent audit is a part of a) Internal check system b) Continuous audit c) Internal audit
system d) None
3. In India, balance sheet audit is synonymous to a) Annual audit b) Continuous audit c) Detailed
audit d) Statutory audit
4. Audit in depth is synonymous for a) Complete audit b) Completed audit c) Final audit
d) Detailed audit
5. Balance sheet audit includes verification of_ a) Assets b) Liabilities

c) Income and expense accounts where appropriate d) All of the above
6. Which of the following statements is not true about continuous audit?

a) It is conducted at regular interval b) It may be carried out on daily basis
c) It is needed when the organization has a good internal control system
d) It is expensive
7. Which of the following is not a fact of EPA?

a) Economic audit b) Efficiency audit c) Expenditure audit d) Effectiveness audit
8. The Delhi Government had constructed six bungalows for its ministers. They are lying
unoccupied for last three years. This would be a matter of concern for a) Propriety Auditor b)
Performance Auditor c) Financial Auditor d) None of the above
9. Financial auditor is not concerned with propriety of business transactions. However, the
exceptions to this rule are contained for audit of limited companies in_
a) Section 227 (IA) of the Companies Act, 1956
b) Section 227 (IA) and section 227(4A) of the Act
c) CARO, 2003 d) Section 227 (IA) and CARO, 2003
10.Balance sheet does not includea) 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
11.Which of the following statements is not correct about materiality?

a) Materiality is a relative concept
b) Materiality judgments involve both quantitative and qualitative judgments
c) Auditor’s consideration of materiality is influenced by the auditor’s perception of the needs
of an informed decision maker who will rely on the financial statements

d) At the planning state, the auditor considers materiality at the financial statement level
only
12.…..the audit risk,….. the materiality and ……the audit effort

a) Lower, Higher, Lower b) Lower, Lower, Higher
c) Higher, Lower, Lower d) Lower, Higher, Higher
13.When issuing unqualified opinion, the auditor who evaluates the audit findings should be
satisfied that the
a) Amount of known misstatement is documented in working papers
b) Estimates of the total likely misstatement is less than materiality level
c) Estimate of the total likely misstatement is more than materially level
d) Estimates of the total likely misstatement cannot be made
14. In determining the level of materiality for an audit, what should not be considered?
a) Prior year’s errors b) The auditor’s remuneration
c) Adjusted interim financial statements d) Prior year’s financial statements
15. Analytical procedures issued in the planning stage of an audit, generally

a) helps to determine the nature, timing and extent of other audit procedures
b) directs attention to potential risk areas
c) indicates important aspects of business d) All of the above
16.Which of the following statements is most closely associated with analytical procedure
applied at substantive stage?
a) It helps to study relationship among balance sheet accounts
b) It helps to discover material misstatements in the financial statements
c) It helps to identify possible oversights
d) It helps to accumulate evidence supporting the validity of a specific account balance
17.For all audits of financial statements made in accordance with AAS14, the use of analytical
procedures is at the discretion of the auditor in which stage?
a) Substantive testing b) Planning stage c) Overall review stage d) All of the above
18.The basic assumption underlying the use of analytical procedures is :

a) It helps the auditor to study relationship among elements of financial information
b) Relationship among data exist and continue in the absence of known condition to the
contrary
c) Analytical procedures will not be able to detect unusual relationships
d) None of the above.
19.What are analytical procedures?

a) Substantive tests designed to assess control risk

b) Substantive tests designed to evaluate the validity of management’s representation letter
c) Substantive tests designed to study relationships between financial and nonfinancial
d) All of the above
20.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
21.When applying analytical procedures, an auditor could develop independent estimate of an

account balance to compare it to a) client’s unedited account balance
b) client’s unedited account balance adjusted for trends in the industry
c) Prior year audited balance
d) Prior year audited balance adjusted for trends in the industry
22.What is the primary objective of analytical procedures used in the overall review stage of an
audit?
a) To help to corroborate the conclusions drawn from individual components of financial
statements
b) To reduce specific detection risk
c) To direct attention to potential risk areas
d) To satisfy doubts when questions arise about a client’s ability to continue
23. Of the following, which is the least 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) Computations made by the auditor
24. Which of the following statements is, generally, correct about the reliability of audit
evidence?
a) To be reliable, evidence should 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.
25. In an audit of financial statements, substantive tests are audit procedures that __ a) may be
eliminated for an account balance under certain conditions
b) are designed to discover significant subsequent events

c) will increase proportionately when the auditor decreases the assessed level of control risk
d) may be test of transactions, test of balance and analytical procedures
26. The nature, timing and extent of substantive procedures is related to assessed level of
control risk
a) randomly b) disproportionately c) directly d) inversely
27. 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 quantity of audit evidence d) The independence of the source of evidence
28. When is evidential matter, generally, considered sufficient?

a) When it constitutes entire population
b) When it is enough to provide a basis for giving reasonable assurance regarding
truthfulness
c) When it is objective and relevant
d) When auditor collects and evaluates it independently
29. Which of the following is not a corroborative evidence?

a) Minutes of meetings b) Confirmations from debtors
c) Information gathered by auditor through observation
d) Worksheet supporting consolidated financial statements
30. Which of the following statements is not true with respect to management representations
obtained as per AAS11?
a) Authenticated copy of relevant minutes of meetings may be regarded as management
representation
b) It should always be in working
c) It may be dated prior to the report date d) It should be addressed to the auditor
1. Of the following, which is the least 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)
Computations made by the auditor
2. Which of the following statements is, generally, correct about the reliability of
audit evidence? a) To be reliable, evidence should 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.

3. In an audit of financial statements, substantive tests are audit procedures

that __ a) may be eliminated for an account balance under certain conditions b) are
designed to discover significant subsequent events c) will increase proportionately when
the auditor decreases the assessed level of control risk d) may be test of transactions,
test of balance and analytical procedures
4. The nature, timing and extent of substantive procedures is related to assessed

level of control risk a) randomly b) disproportionately c) directly d) inversely
5. 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 quantity of audit evidence d) The independence of the source of evidence
6. When is evidential matter, generally, considered sufficient? a) When it

constitutes entire population b) When it is enough to provide a basis for giving
reasonable assurance regarding truthfulness c) When it is objective and relevant d)
When auditor collects and evaluates it independently
7. Which of the following is not a corroborative evidence? a) Minutes of meetings

b) Confirmations from debtors c) Information gathered by auditor through observation d)
Worksheet supporting consolidated financial statements
8. Which of the following statements is not true with respect to management

representations obtained as per AAS11? a) Authenticated copy of relevant minutes
of meetings may be regarded as management representation b) It should always be in
working c) It may be dated prior to the report date d) It should be addressed to the
auditor
9. What would most appropriately describe the risk of incorrect rejection in terms
of substantive testing? a) The auditor concludes balance is materially correct when in
actual fact it is not b) The auditor concludes that the balance is materially misstated
when in actual fact it not c) The auditor has rejected an item for sample which was
material d) None of the above
10.Which of the following affects audit effectiveness? a) Risk of over reliance b)

Risk of incorrect rejection c) Risk of incorrect acceptance d) Both (a) and (c)
11.What would most effectively describe the risk of incorrect acceptance in terms
of substantive audit testing? a) The auditor has ascertained that the balance is
materially correct when in actual fact it is not b) The auditor concludes the balance is
materially misstated when in actual fact is not c) The auditor has rejected an item from
sample which was not supported by documentary evidence
12. Which of the following Auditing Assurance Standard deals with Audit
Planning? a) AAS7 b) AAS8 c) AAS9 d) AAS3

13. Audit programme is prepared by a) the auditor b) the client c) the audit assistants
d) the auditor and his audit assistants
14. The working papers which auditor prepares for financial statements audit are
: _ a) evidence for audit conclusions b) owned by the client c) owned by the auditor d)
retained in auditor’s office until a change in auditors
15. The quantity of audit working papers complied on engagement would most be
affected by a) management’s integrity b) auditor’s experience and professional
judgment c) auditor’s qualification d) control risk
16. Which of the following best describes the primary purpose of audit
programme preparation? a) To detect errors or fraud. b) To comply with GAAP c) To
gather sufficient appropriate evidence d) To assess audit risk
17. Which of the following is not an advantage of the preparation of working

paper? a) To provide a basis for review of audit work b) To provide a basis for
subsequent audits c) To ensure audit work is being carried out as per programme d) To
provide a guide for advising another client on similar issues
18. The auditor’s permanent working paper file should not normally, include a)
extracts from client’s bank statements b) past year’s financial statements c) attorney’s
letters b) debt agreements
19. For what minimum period should audit working papers be retained by audit
firm? a) For the time period the entity remains a client of the audit firm. b) For a period
of ten years c) For a period auditor opines them to be useful in servicing the client d)
For the period the audit firm is in existence.
20. Which of the following factors would least likely affect the quantity and
content of an auditor’s working papers a) The assessed level of control risk b) The
possibility of peer review c) The nature of auditor’s report d) The content of
management representation letter
21.Which of the following statement is true regarding an auditor’s working

papers? a) They document the level of independence maintained by the auditor b)
They should be considered as the principle support for the auditor’s report c) They
should not contain details regarding weaknesses in the internal control system d) They
help the auditor to monitor the effectiveness of the audit firm’s quality control
22.Which of the following statement best describes the understanding with

respect to ownership and custody of working papers prepared by an auditor? a)
The working papers may be obtained by third parties when they appear to be relevant to
issues raised in litigation b) The safe custody of working papers is the responsibility of
client, if kept at his premises c) The working papers must be retained by an audit firm
for a period of 10 years d) Successor auditors may have access to working papers of
the predecessor auditors. The approval of client is not required.

23.The current file of the auditor’s working papers, generally, should include a) a
flowchart of the internal controls b) Organisation charts c) a copy of financial statements
d) copies of bond and debentures
24 .Knowledge of the entity’s business does not help the auditor to a) reduce
inherent risk b) identify problem areas c) evaluate reasonableness of estimates d)
evaluate appropriates of GAAP.
25.The main advantage of using statistical sampling techniques is that such

techniques: a) mathematically measure risk b) eliminate the need for judgmental
sampling c) defines the values of tolerable error d) all of the them.
26.Which of the following methods of sample selection is least suitable for

extrapolating results to the population? a) Systematic sampling b) Random
sampling c) Haphazard sampling d) None
27.Which of the following statements is correct? a) Lower the sampling risk greater
the sample size b) Smaller the tolerable error, greater the sample size c) Lower the
expected error, smaller the sample size d) All are correct
28.Which of the following features is most important for randombased

selection? a) Sample should be drawn form population b) Every strata of population
should be represented in the sample c) Every item in the population has an equal
chance of being selected in the sample d) Items should be selected at ‘n’ th interval
29.Risk of under reliance is the risk that the sample selected to test
controls___ a) Does not support the auditor’s planned assessed level of control risk
when the true operating effectiveness of the control structure justifies such an
assessment b) Supports the auditor’s planned assessed level of control risk when the
actual position does not warrant such reliance c) Is not supported by adequate
documents d) both (a) & (c)
30.Which of the following factors is (are) considered in determining the sample

size for tests of control? a) Projected error b) Tolerable error c) Expected error d)
Both (b) and (c)
31.Tolerable error, is the maximum monetary error that the auditor is prepared to
accept in the population and still conclude that audit objective has been
achieved, is directly related to a) Sample size b) Audit risk c) Materiality d) Expected
error
32. Which of the following expenses should not be treated as capital expenditure? a)
Expenses paid on installation of a plant. b) Cost of dismantling a building in case a new
building is to be constructed on the land c) Legal expenses incurred to defend a suit
related to title of patent. The suit has been lost d) The fees paid to engineer who
constructed the plant.

33. Which of the following is not a revenue expense? a) Cost of raising a loan b)
Cost of accessories of motor vehicles spent at the time of purchase c) Expenses
incurred for laying of sewers on land purchased d) Insurance premium paid at the time
of registration of the ship
34. Depreciation does not arise form _______ a) effluxion of time b) use c)
obsolescence through technology be market changes d) remarket expectation
35. Which of the following Schedule of the Companies Act, 1956 deals with
depreciations? a) Schedule XIV b) Schedule V c) Schedule XIII d) Schedule X
36. Schedule XIV has prescribed rates of depreciation for double shift and triple
shift working for which one of the following assets? a) Building b) Plant and
Machinery c) Furniture and fittings d) Ships
37. If the book value of an asset stands at ……..per cent of the original cost, a
company need not provide depreciation on it. a) two b) fifteen c) five d) ten
38. A company has bought patents. Which of the following methods is most
suitable for providing depreciation on them? a) SLM b) WDV c) Sumof year digits d)
Any of the above
39. Which of the following is a revenue reserve? a) Capital redemption reserve b)

Security premium account c) Debenture redemption reserve d) Capital reserve
40. Which of the following will not lead to creation of secret reserve? a)
Undervaluation of closing stock b) Charging capital expenditure to revenue c) Goods
sent on consignment being shown as actual sales d) Charging higher rates of
depreciation on fixed assets than actually required
Accounting MCQS
1. ——– are the third persons/parties, who owe money from the business.
Business partner
Debtor
Customer
2. At times, we receive discounts from our creditors. This discount is either treated
as income of the business or as a reduction in the cost of
Income
Balance
Stock
Returned
3. When an expense or other payable is accrued it is

current liability
Assets
Income
current assets
4. ———— is made when it is known that an expense will arise but the exact amount is not
known.
Accrual
Provision
Reserves
Good will
5. Accounting Treatment of Provision

Relevant Expense Account (Dr) Provisions (Cr)
cash (Dr) Provisions (Cr)
Account payable (Dr) Provisions (Cr)
Provisions (Dr) Relevant Expense Account (Cr)
6. Debtors is also called

Provisions
Stock
Receivables
none of them
7. Receivables are the ———-

current assets
Fixed assets
long term assets
all of above
8. When a debtor does not pay the amount due to him, it is said
Provision
Accrual
Debt
Bad Debts
9. Recording of Bad Debts

Bad Debts (Dr) Debtors a/c (Cr)
Drawings (Dr) Debtors a/c (Cr)
Bad Debts (Dr) Drawings (Dr)
Debtors a/c(Dr) Bad Debts (Cr)
10. Debtors 100,000 Provision for Bad Debts 5,000 so the net receivable income is
100000
105000
95000

none of them
11. Provision for bad debts is also ——— deboters

add
less
save
recorded
12. Debtors are 15000 and the provision is 37% calculate net Debtors
15000
9400
11000
9450
13. which one of them is current asset

cash
land
bill paid
advance income
14. Sales Ledger Control Account is also called
Debtors Control Account
Creditors Control Account
15. In General Ledger one account is kept for all the ——– Creditors Control Account.
Debtors Control Account,
Creditors Control Account.
16. List of debtors balances drawn up to the end of previous period is ——–
Opening balance of debtors
Opening balance of account payable
Closing Balance of debtors
none of these
17. Opening balance of recorded on the ———- side of Debtors Control Accounts
Dr
Cr
18. Credit Sales ———- the debtors balance

equal to
decrease
no effect on
increase
19. Sales Return means

customer returned the goods
Supplier returned the goods

Store returned the goods

all of these
20. Cheques/Cash Received from the customer —— the debter balance

increased
no affect
decreased
A&C
21. Which is the simple formula of calculating closing balance of deboter

Opening balance + Credit Sales +(Sales Return + Cheques/Cash Received)=
Opening balance + Credit Sales – (Sales Return – Cheques/Cash Received)=
Opening balance – Credit Sales – (Sales Return + Cheques/Cash Received)=
Opening balance + Credit Sales – (Sales Return + Cheques/Cash Received)=
22. List of creditors balances drawn up to the end of previous period is ———— balance of
creditor for this year
Closing
Opening
23. Cheques/Cash Paid — the creditor balance

increase
decrease
24. The formula for calculating closing balance of creditor is

Opening balance + Credit Purchases – (Purchase Return- Cheques/Cash Paid)
Opening balance – Credit Purchases – (Purchase Return + Cheques/Cash Paid)
Opening balance + Credit Purchases + (Purchase Return + Cheques/Cash Paid)
Opening balance + Credit Purchases – (Purchase Return + Cheques/Cash)
25. calculate closing balance of debter Opening Balance 50000 cash received 70000 Opening
balance 30000 sale returned 2000
72000
80000
8000
32000
26. Prepare a Creditors Control Account from the following data Opening Balance 40000
Purchase Return 6000 Cheques and Cash paid 34000 Discounts received 2000 Total Credit
Purchases 32,000
32000
72000
3000
30000
27. A number of books are opened in connection with control accounts to reduce the volume of
general ledger these books are called
Purchase book
Sales book
Subsidiary Books
A&C
28. Sale return is recorded on the —— of Debtors control Account

Debit Side
Credit Side
—
—
29. Discounts allowed is ——
Income
Good will
Asset
Expense
30. In Debtors control Account the Debit Side is greater then—-

Debtors control Account
Credit Sales
Credit Side
Cheques and Cash received
31. Debtor 45,000, amount received ——- closing balance is 19825

25175
21752
25751
22751
32. Individual purchases are recorded in ——

Purchase Journal / Purchase Day Book
Purchase Return / Return outward Journal
Creditors Ledger
all of these
33. ——– ledger maintains record of individual creditors

Purchase Journal / Purchase Day Book
Purchase Return / Return outward Journal
Creditors Ledger
none of these
34.Purchase Return is recorded on the ——- side of creditor control account.

Cr

Dr
—
—
35. Bad Debts are ——- expenses

General
Financial
Selling
Administration
36. When the Provision for Bad Debts increases Debtors

increased
decreases
remain constant
none of these
37. Individual invoice wise sales are recorded in this Journal. This book serves as source for all
the recording of Credit sales.
Sales Return / Return Inward
Sales Journal / Sales Day Book
Debtors Ledger
none of above
38. which one of them is current asset
Insurance expenses
prepaid expenses
Rent expenses
all of the following
39. which one is current liability?

land
income
Debtor
Creditors
40. which one is long term liability?

creditors
loan from mr A
bank loan
all of these
41. which one is liability?

UN earned income
furniture
account receivable
none of these

42. Creditor account increase with

credit
credit sale
credit purchase
A & B`
43. Debtor account increase with

Debit
Credit
Credit income
Credit sale
44. Creditor control account decreased when

Purchase Return
Cheques / Cash paid
Cheques / Cash received
A&B
45. Debtors control account decreased with

Opening balance of debtors
Cheques / Cash Received
Sales Return
purchase Return
46. Discount allowed showed on the ——– of debtors control account

Credit side
Debit side
47. sales return is also called

return inward
return outward
return to supplier
none of these
48. —— this ledger maintains record of individual creditors.

Purchase Day Book
Purchase Journal
Creditors Ledger
Return outward Journal
49. 2nd name of Purchase Return is

return to customer
Creditors
Purchases inward

Return outward
50. —– this ledger maintains record of individual debtor.

Debtors Ledger
Sales Journal
Sales Return
Sales Day Book

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Auditing MCQS Notes

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Muhammad Mustafa MBA from uos and also Digital Marketing certify

5. Balance sheet audit includes verification of_ a) Assets b) Liabilities

6. Which of the following statements is not true about continuous audit?

7. Which of the following is not a fact of EPA?

10.Balance sheet does not includea) Verification of assets and liabilities

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11.Which of the following statements is not correct about materiality?

12.…..the audit risk,….. the materiality and ……the audit effort

15. Analytical procedures issued in the planning stage of an audit, generally

18.The basic assumption underlying the use of analytical procedures is :

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19.What are analytical procedures?

20.Which of the following is not an analytical procedure?

21.When applying analytical procedures, an auditor could develop independent estimate of an

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c) Evidence obtained from outside sources routed through the client

28. When is evidential matter, generally, considered sufficient?

29. Which of the following is not a corroborative evidence?

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5. Balance sheet audit includes verification of_ a) Assets b) Liabilities

6. Which of the following statements is not true about continuous audit?

7. Which of the following is not a fact of EPA?

10.Balance sheet does not includea) Verification of assets and liabilities

11.Which of the following statements is not correct about materiality?

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12.…..the audit risk,….. the materiality and ……the audit effort

15. Analytical procedures issued in the planning stage of an audit, generally

18.The basic assumption underlying the use of analytical procedures is :

19.What are analytical procedures?

a) Substantive tests designed to assess control risk

20.Which of the following is not an analytical procedure?

21.When applying analytical procedures, an auditor could develop independent estimate of an

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28. When is evidential matter, generally, considered sufficient?

29. Which of the following is not a corroborative evidence?

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3. In an audit of financial statements, substantive tests are audit procedures

4. The nature, timing and extent of substantive procedures is related to assessed

5. Which of the following factors is most important in determining the

6. When is evidential matter, generally, considered sufficient? a) When it

7. Which of the following is not a corroborative evidence? a) Minutes of meetings

8. Which of the following statements is not true with respect to management

10.Which of the following affects audit effectiveness? a) Risk of over reliance b)

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17. Which of the following is not an advantage of the preparation of working

21.Which of the following statement is true regarding an auditor’s working

22.Which of the following statement best describes the understanding with

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25.The main advantage of using statistical sampling techniques is that such

26.Which of the following methods of sample selection is least suitable for

28.Which of the following features is most important for randombased

30.Which of the following factors is (are) considered in determining the sample

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39. Which of the following is a revenue reserve? a) Capital redemption reserve b)

3. When an expense or other payable is accrued it is

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5. Accounting Treatment of Provision

6. Debtors is also called