Auditing MCQ'S Answers

Vibhav Galadagekar (SHETH NKTT COLLEGE)
TYBBI
SEM V
AUDITING
Multiple Choice Questions
1. Which of the following is not a kind of audit?

a) Statutory and private.
b) Government and continuous audit.
c) Interim audit.
d) None of these
2. This kind of audit is conducted generally between two annual audits.

a) Internal audit.
b) Interim audit.
c) Final audit.
d) Continuous audit.
3. Voucher relates to ______.

a) Cash receipt.
b) Cash payment.
c) Credit transactions
d) All of the above.
4. Which of the following persons is qualified to be a company auditor?

a) An employee of the company
b) A body corporate
c) A person who is indebted to the company for an amount exceeding Rs. 1000
d) A practicing-chartered accountant
5. When the auditor is an employee of the organization being audited, the audit is classified as
a) Internal
b) External
c) Compliance
d) Both A&B
6. A company auditor can be removed before expiry of his term by

a) Shareholders
b) Board of Directors
c) Central Government
d) State Government
7. If there is capital loss, the auditor should

a) Not allow payment of dividend
b) Allow payment of dividends
c) Allow payment of dividends after making such losses good
d) None of the above
8. Auditor should see that amount received for premium on issue of shares should be shown in
a) Subscribed capital
b) Capital Reserve account
c) Share Premium account
d) Paid- up capital account
9. Internal auditor is appointed by______

a) Management
b) Shareholders
c) Government
d) Statutory body
10. ______ is the medium through which an auditor expresses his opinion on the state of affairs of
the client’s business.
a) Audit report
b) Audit certificate
c) Audit programme
d) Audit planning
11. If an auditor is not appointed at annual general meeting, he is appointed by the

a) The Central Government
b) Board of Directors
c) Shareholders
d) Company Law board
12. The audit that is made compulsory under statute is called ________
a) Statutory audit
b) Partial audit
c) Complete audit
d) Continuous audit
13. Audit means _______.

a) Recording business transactions
b) Preparing final accounts
c) Examination of books, accounts or vouchers
d) Decision making
14. When a transaction has not been recorded in the books of account either wholly or partially such
errors are called _______.
a) Error of commission
b) Error of omission
c) Compensating error
15. The liabilities of an auditor can be ________.

a) Civil
b) Criminal
c) Civil & Criminal
d) Financial
16. Internal control includes ________.

a) Internal audit c) Both internal audit and internal check
b) Internal check d) Internal check and external audit
17. Misappropriation of goods may be checked by

a) Proper supervision over stock
b) Checking of employees
c) Punishment of employees
18. Auditor has no lien on

a) Audit note book
b) Audit working papers
c) Books of accounts of clients
19. Accounting standards are prepared by

a) SEBI c) ASB
b) RBI d) ITA
20. Cost auditor submits reports to the:

a) Shareholder
b) Board of directors
c) Employees
d) Creditors
21. Bonus shares are issued to _______.

a) New members
b) Existing shareholders
c) Employees
22. Window dressing implies

a) Checking wastages
b) Under valuation of assets
c) Over valuation of assets
23. Internal check is suitable for _______.

a) Larger concerns
b) Smaller concerns
c) Petty-shop keepers
24. Remuneration of an internal auditor is fixed by ______.

a) Management
b) Shareholders
c) Government
d) Statutory body
25. The objective of the audit planning is ________

a) To give appropriate attention to all important areas of audit
b) To identify potential problems
c) To coordinate work with other auditors and experts
d) All of the above
26. Audit papers are the property of ______.
a) Client
b) Auditor
c) Both the client and the auditor
d) The audit committee
27. The term “Audit” originated from the Latin word

a) Audire
b) Adhere
c) Adihere
28. Sole proprietary concerns are ______ to get their financial statements audited by independent
financial auditors.
a) Legally required
b) Not legally required
c) Ethically required
d) Not ethically required
29. Balance sheet audit is also known as

a) Continues audit
b) Annual audit
c) Internal audit
d) Financial audit
30. ______ lays out the strategies to be followed to conduct an audit.

a) An action plans
b) An audit plans
c) An audit programme
d) All of the above
31. Auditor should determine the ______ and the timing of the audit report.
a) Nature
b) Actual
c) Nature & actual
d) Form
32. ______ followed by the enterprise affect the audit plan.

a) Accounting policies
b) Audit policies
c) Accounting and Audit policies
d) Management policies
33. An audit programme is a set of _______ which are to be followed for proper execution of audit.
a) Rules
b) Policies
c) Instructions
d) Actions
34. Audit programme provides instructions to the audit staff and reduces scope for
a) Understanding
b) Misunderstanding
c) Negligence
d) Liabilities
35. Audit programme helps in fixing the ______for the work done among the audit staff as work
done may be traced back to the individual staff members.
a) Remuneration
b) Liabilities
c) Negligence
d) Responsibility
36. On completion of an audit _______serves the purpose of audit record which may be useful for
future reference.
a) Audit programme
c) Audit plan
d) Audit notes
37. Audit programme is prepared by _____

a) The auditor
b) The client
c) The audit assistant
d) The auditor and his audit assistants
38. The auditor has to obtain _______ to substantiate his opinion on the financial statements.
a) Internal evidence
b) External evidence
c) Internal and external evidence
d) Sufficient and appropriate evidence
39. _______ are the documents prepared or obtained by the auditors in connection with the audit.
a) Audit notes
c) Audit report
d) All of the above
40. Working papers helps in proper _______ of audit.

a) Planning
b) Performance
c) Planning and performance
d) Execution
41. If no auditors are appointed or re-appointed at the annual general meeting, the ______ may
appoint a person to fill the vacancy. a) Board of directors b) Company in general meeting c) Central
Government d) Comptroller and Auditor General of India (C&AG)
42. Failure to give notice regarding filling of casual vacancy to the Central government is an offence
punishable with fine, who of the following are the persons on whom such fine can be imposed. a)
Directors b) Company c) Every officer of the company d) Company or every officer of the company
43. A statutory auditor-------- also as internal auditor of the company. a) Can act b) Cannot act c)
Though can act but ethically should not act d) None of the above
44. A person shall not be qualified to be appointed as an auditor of the company if he is in the
employment of ____ a) An officer of the company b) An employee of the company c) Both (a) and
(b) d) None of the above
45. In case of insolvency or unsound mind, a person will automatically be disqualified for
appointment as an auditor, because a) He is not a person of repute b) He cannot take decision
properly c) He is not wealthy d) He ceases to be a member of ICAI
46. The auditors have the right to attend a) Board meeting b) Annual general meeting c)
Extraordinary general meeting d) Any general meeting
47. The retiring auditor does not have a right to______ a) To make written representation b) Get his
representation circulated c) Be heard at the meeting d) Speak as a member of the company
48. In comparison to the independent auditor, an internal auditor is more likely to be concerned
with _______ a) Cost accounting system b) Internal control system c) Legal compliance d)
Accounting system
49. Whether the management can restrict the scope of work of an external auditor? a) Yes b) No c)
In some cases d) If shareholders permit
50. It is the duty of the auditor to ________ to the members of the company on the Accounts
examined by him. a) Give suggestions b) Comment c) Refer certain points d) Make a report
Prepared by – Asst. Prof Vibhav Galadagekar

TYBBI SEM V
Subject – Auditing

Auditing MCQ'S Answers

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Vibhav Galadagekar (SHETH NKTT COLLEGE)

Multiple Choice Questions

1. Which of the following is not a kind of audit?

2. This kind of audit is conducted generally between two annual audits.

3. Voucher relates to ______.

4. Which of the following persons is qualified to be a company auditor?

6. A company auditor can be removed before expiry of his term by

7. If there is capital loss, the auditor should

9. Internal auditor is appointed by______

11. If an auditor is not appointed at annual general meeting, he is appointed by the

13. Audit means _______.

15. The liabilities of an auditor can be ________.

16. Internal control includes ________.

17. Misappropriation of goods may be checked by

18. Auditor has no lien on

19. Accounting standards are prepared by

20. Cost auditor submits reports to the:

21. Bonus shares are issued to _______.

22. Window dressing implies

23. Internal check is suitable for _______.

24. Remuneration of an internal auditor is fixed by ______.

25. The objective of the audit planning is ________

27. The term “Audit” originated from the Latin word

29. Balance sheet audit is also known as

30. ______ lays out the strategies to be followed to conduct an audit.

32. ______ followed by the enterprise affect the audit plan.

37. Audit programme is prepared by _____

40. Working papers helps in proper _______ of audit.

Prepared by – Asst. Prof Vibhav Galadagekar

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