auditing MCQs – Page 5

Practise multiple-choice questions from auditing for competitive examinations and subject revision. Review each marked answer and report any item that may be outdated or unclear.

auditing Mcqs

81. In determining the level of materiality for an audit, what should not be considered?
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A. Prior years errors

B. Adjusted interim financial statements

C. Prior years financial statements

D. The auditors remuneration

82. Which of the following are fundamental ethical principles for professional accountants? <br>1 Competence <br>2 Compliance <br>3 Integrity <br>4 Objectivity
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A. 1, 2 and 4 only

B. 1, 3 and 4 only

C. 2, 3 and 4 only

D. 1, 2 and 3 only

83. Test Checking refers to___________?
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A. Testing of accounts and records

B. Checking of selected number of transactions

C. Checking of all transactions recorded

D. Examination of adjusting and closing entries

84. Why do auditors concentrate their efforts on material items in accounts?
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A. Because the risk to the accounts of their being incorrectly stated is greater

B. Because they are easier to audit

C. Because the directors have asked for it

D. Because it reduces the audit time

85. What is meant by the expression expectation gap?
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A. The gap between how the directors of a company perform their duties and how the general public expects them to perform

B. The gap between how the directors of a company perform their duties and how the shareholders expect them to perform

C. The gap between the auditors own perception of their duties and how they are set out in the Companies Act

D. The gap between the public perception of the role of company auditors and their statutory role and responsibilities

86. The auditors permanent working paper file should not normally, include__________?
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A. Attorneys letters

B. Extracts from clients bank statements

C. Past years financial statements

D. Debt agreements

87. Depreciation does not arise form _______
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A. effluxion of time

B. remarket expectation

C. obsolescence through technology be market changes

D. use

88. When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the_____________?
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A. Amount of known misstatement is documented in working papers

B. Estimates of the total likely misstatement is less than materiality level

C. Estimates of the total likely misstatement cannot be made

D. Estimate of the total likely misstatement is more than materially level

89. When restrictions that significantly affect the scope of the audit are imposed by the client, the auditor generally should issue which of the following opinion?
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A. Disclaimer of opinion

B. Qualified opinion

C. Unqualified report with an emphasis of matter paragraph?

D. Adverse opinion

90. ____________ is a systematic examination of the books and records or a business?
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A. Checking

B. Verification

C. Vouching

D. Auditing

91. Auditor of a___________company does not have right to visit foreign branches of the company?
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A. Unlimited liability

B. Manufacturing

C. Banking

D. Nonprofit making

92. When is evidential matter, generally, considered sufficient?
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A. When auditor collects and evaluates it independently

B. When it constitutes entire population

C. When it is objective and relevant

D. When it is enough to provide a basis for giving reasonable assurance regarding truthfulness

93. What is meant by negative assurance?
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A. The auditor did not find anything to indicate that a material misstatement exists.

B. The clients financial statements were found to be materially misstated.

C. The auditor cannot give an opinion due to lack of evidence.

D. The auditor could not conduct any tests due to lack of controls.

94. Internal check is carried on by___________?
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A. Supervisor of the staff

B. Staff specially appointed for the purpose

C. Members of the staff

D. Internal auditor

95. According to ISA 315, which of the following is NOT a control activity?
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A. Performance reviews

B. Organizational structure

C. Physical controls

D. Segregation of duties

96. Audit in depth is synonymous for_____________?
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A. Completed audit

B. Final audit

C. Complete audit

D. Detailed audit

97. The term Audit is derived from a Latin word audire which means___________?
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A. To hear

B. To investigate

C. To inspect

D. To examine

98. Concealment of shortage by delaying the recording of cash receipts is known as_____________?
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A. None of these

B. Embezzlement

C. Lapping

D. Misappropriation

99. Which of the following is not a corroborative evidence?
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A. Confirmations from debtors

B. Minutes of meetings

C. Worksheet supporting consolidated financial statements

D. Information gathered by auditor through observation

100. Errors of Omission are_____________?
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A. Technical errors

B. Compensating errors

C. None of the above

D. Errors of principle

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