Multiple choice Questions of TYBBI

Auditing (Sem 5)

1. An employee cannot be an auditor of the company because __________.

A. he cannot find his own mistakes
B. a person cannot audit his own account
C. he may give bias and subjective views
D. it is prohibited by company law
ANSWER: C
2. Which of the following are not objectives of auditing?
A. Ascertain the profit and preparation of P/L Account, Balance sheet
B. Detection and prevention of frauds and errors
C. Give a true and fair view of financial amount
D. To submits the accounts to Government of India
ANSWER: D
3. An audit which is compulsory by the law is __________.
A. Government Audit
B. Internal Audit
C. Cost Audit
D. Statutory Audit
ANSWER: D
4. Instruction of audit issued by controller and auditor general of India ________.
A. Statutory audit
B. Final Audit.
C. Management audit
D. Government audit
ANSWER: D
5. Audit done by the employees of the business undertaking is called _______.
A. Final audit
B. Management Audit
C. Government Audit
D. Internal Audit
ANSWER: B
6. This kind of audit is conducted generally between two annual audit ______.
A. Internal Audit
B. Interim audit
C. Final Audit
D. Continuous Audit
ANSWER: B
7. Management audit otherwise called as _______.
A. Efficiency Audit
B. Final audit
C. Cost Audit
D. Cash audit
ANSWER: A
8. Before the work of audit is commenced, the auditor plans out the whole of audit work
is
called _________.
A. Audit Plan
B. Audit Note
C. Audit Control
D. Audit Programme
ANSWER: D
9. A number of checks and controls exercised in a business to ensure its efficient
working are known as ________.
A. Internal Check
B. Interim Check
C. Internal Audit
D. Internal Control
ANSWER: D
10. A Voucher is a _______.
A. Document is support of an entry made in books of accounts
B. Invoice received from suppliers
C. Receipt issued to a customer for cash
D. Dispatch Receipt
ANSWER: A
11. Voucher relates to _________.
A. Cash receipt & payments, credit transactions
B. Cash payment only
C. Credit transactions only
D. Cash receipt only
ANSWER: A
12. Internal check is meant for ___________.
A. Prevention of frauds
B. Detection of frauds
C. Helping audit is depth
D. Detection of errors
ANSWER: A
13. Internal auditor is appointed by ________.
A. The Management
B. The Shareholders
C. The Government
D. The Statutory Body
ANSWER: A
14. Auditing begins where ______ ends.
A. Selling
B. Inventory Valuation
C. Purchases
D. Accounting
ANSWER: D
15. A kind of audit conducted for a part of the accounting year is called _______.
A. Periodical Audit
B. Partial Audit
C. Cost Audit
D. Interim Audit
ANSWER: A
16. For which of the following, Audit is optional?
A. Trusts
B. Joint stock companies
C. Proprietorship concern
D. Private Limited Companies
ANSWER: C
17. The audit that is made compulsory under statute is called _________.
A. Statutory audit
B. Partial audit
C. Complete Audit
D. Continuous Audit
ANSWER: A
18. The receipt of goods must be entered in _________.
A. Goods inward book
B. Goods outward book
C. Receipt of Stores & Goods outward book
D. Receipt issue and balance of stores
ANSWER: A
19. Auditing standards differ from auditing procedures in that procedures relate to
________.
A. Measure of performance
B. Audit principles
C. Acts to be performed
D. Audit judgments
ANSWER: C
20. Confirmation of the court is necessary for __________.
A. increasing the share capital
B. reduction of share capital
C. conversion of shares into stock
D. issue of new shares
ANSWER: B
21. Profit prior to incorporation may be utilized to ___________.
A. write of goodwill
B. pay interest on purchase consideration
C. writing off fixed assets
D. pay interest on secured loans
ANSWER: A
22. Which of the following is not true about opinion on financial statements?
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 principles have been consistently
followed
ANSWER: A
23. Audit means ___________.
A. recording business transactions
B. preparing the final accounts
C. examination of books, accounts, vouchers etc.
D. preparing final accounts
ANSWER: C
24. Audit programme is prepared ______________.
A. to help the auditor and his staff about the work to be done while auditing
B. to help the accountant to prepare the balance sheet
C. to help the company to submit its accounts
D. to help the shareholders to file the returns
ANSWER: A
25. Auditor shall report on the accounts examined by him __________.
A. to the proprietor
B. to the court
C. to the bank
D. to the general public
ANSWER: A
26. Purchase of machinery is a ____
A. revenue receipt
B. capital receipt
C. capital expenditure
D. revenue expenditure
ANSWER: C
27. Sale of land is a __________.
A. revenue receipt
B. capital receipt
C. capital expenditure
D. revenue expenditure
ANSWER: B
28. Shares are forfeited on the non-payment of ____________.
A. share calls amount
B. calls in advance
C. minimum share capital
D. debenture amount
ANSWER: A
29. Secret reserve can be created by _______________.
A. public limited company only
B. banking and financial companies only
C. private limited company only
D. Co-operative societies
ANSWER: B
30. Internal controls and internal check are ____________.
A. one and the same
B. different
C. internal control includes internal check
D. both are not related
ANSWER: C
131. When a transaction has not been recorded in the books of account either wholly or
partially such errors are called as _________.
A. errors of commission
B. error of principle
C. compensating error
D. errors of omission
ANSWER: D
32. Verification of the value of assets, liabilities, the balance of reserves, provision and
the
amount of profit earned or loss suffered a firm is called _________.
A. continuous audit
B. partial audit
C. interim audit
D. balance sheet audit
ANSWER: D
33. A sale of Rs. 50000 to Mr. A was entered as a sale to Mr. B. This is an example of
what?
A. Error of omission
B. Error of commission
C. Compensating error
D. Error of principle
ANSWER: B
34. Recording a transaction twice in the books of original entry is an error of
__________.
A. principle
B. commission
C. omission
D. duplication
ANSWER: D
35. Errors and frauds already committed can be discovered under the system of
________.
A. internal audit, internal check, internal control
B. external check
C. statutory audit
D. interim audit
ANSWER: A
36. Treating revenue expenditure as capital expenditure is a case of _________.
A. fraud
B. misappropriation of cash
C. misappropriation of goods
D. manipulation of accounts
ANSWER: D
37. Vouching of the balances of all incomes and expenses account is known as
vouching of______.
A. personal ledger
B. impersonal ledger
C. cash
D. sales
ANSWER: B
38. The main objects of investigation is _________.
A. to discover errors and frauds
B. to prevent errors and frauds
C. to verify statements
D. all the above
ANSWER: D
39. Goods sent on approval basis have been recorded as credit sales. This is an
example of
what?
A. Error of principle
B. Error of commission
C. Error of omission
D. Error of duplication
ANSWER: A
40. Preliminary expenses are the best example for _________.
A. fictitious asset
B. intangible asset
C. wasting asset
D. floating asset
ANSWER: B
41. The profits that can be legally distributed to shareholders are called _________.
A. revenue profits
B. capital profits
C. divisible profits
D. divisible profits
ANSWER: D
42. Errors of principle are due to ___________.
A. wrong entry of the transaction in the books of original entry
B. wrong allocation of expenditure between capital and revenue
C. mistake in the payment of commission
D. mistake in the payment of salary
ANSWER: A
43. Periodical audit is also called as _________.
A. final audit
B. interim audit
C. balance sheet audit
D. income statement audit
ANSWER: C
44. An audit programme is ___________.
A. a description, memorandum or an outline of the work to be done in a business
B. the rules and regulations prescribed for writing up the books of accounts
C. to gain knowledge of clients accounting system
D. a trial work
ANSWER: B
45. The auditor of a government company shall be appointed by ________.
A. the government company itself
B. the central government
C. the share holders
D. the debenture holders
ANSWER: B
46. The main object of the audit of the cash book may be ________.
A. to verify the assets and liabilities
B. to know that all receipts and payments have been properly recorded
C. to check the internal control system in business
D. to check the bank balance
ANSWER: B
47. The first auditors appointed by head office ____________.
A. for a period of one year
B. for a period of two years
C. for a period of three years
D. till the conclusion of the first annual general meeting
ANSWER: D
48. One of the audit procedures to check the issue of share capital of the newly formed
company is __________.
A. the memorandum of association and articles of association
B. the share transfer register
C. the issue of debenture
D. certificate of commencement
ANSWER: A
49. Capital reserves are created out of profits of __________.
A. a revenue nature
B. a capital nature
C. a secret reserve
D. contingency reserve
ANSWER: B
50. A good audit report must at least meet one of the following qualifications
__________.
A. it should offer constructive and timely suggestions to the management
B. it should not point out mistakes
C. it should not be based on factual information
D. it should not be based on balance sheet
ANSWER: A

51.The work of one clerk is automatically check by another clerk is called

_________.

A. internal control

B. internal check

C. internal audit

D. interim audit

ANSWER: B

52. Surprise checks are part of ____________.

A. an auditor's working papers

B. an audit programme

C. an auditor's report

D. an accounting standard

ANSWER: B

53. Internal check is meant for __________.

A. prevention of frauds

B. detection of frauds
C. helping audit in depth

D. the existence of a good system of internal check reduces to a great

extent

ANSWER: A

54. Audit conducted between two annual audits is called as ____________.

a. Interim

b. Annual

c. final

d. Non-Statutory

ANSWER A

55. Auditor can seek opinion from different expert on ______ matters

a. Mechanical

b. Technical

c. Environmental

d. Social

Answer B

56. The owners of the company are called __________.

A. debenture holders

B. debtors

C. equity shareholders

D. creditors

ANSWER: C

57. Verification is __________.

A. the art of recording the business transaction

B. an examination of the books of accounts

C. the act of establishing the accuracy of entries in the books of accounts

D. authorizing books of accounts

ANSWER: C

58. Special audit is necessary for _________.

A. inefficient concern

B. processing concern

C. trading concern

D. manufacturing concern

ANSWER: A

59. In India, balance sheet audit is synonymous to _______________.

A. annual audit

B. continuous audit

C. detailed audit

D. statutory audit

ANSWER: A

60. Audit Programme is prepared by ___________.

A. the auditor

B. the client

C. the audit assistants

D. the auditor and his audit assistants

ANSWER: D