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Auditing MCQs with Explanations

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51AuditingMedium

Which one of the following is NOT considered to be part of planning?

AConsidering whether the financial statements show a true and fair view

BPrevious year’s audit i.e. any qualifications in the report

CConsidering the work to be done by the client staff e.g. internal audit

DBackground i.e. industry

Correct answer

A. Considering whether the financial statements show a true and fair view

Explanation

Considering whether the financial statements show a true and fair view is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

52AuditingMedium

Concurrent audit is a part of____________?

AContinuous audit

BInternal audit system

CInternal check system

DNone of these

Correct answer

B. Internal audit system

Explanation

Internal audit system is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

53AuditingMedium

What would most appropriately describe the risk of incorrect rejection in terms of substantive testing?

AThe auditor has rejected an item for sample which was material

BThe auditor concludes balance is materially correct when in actual fact it is not

CNone of the above

DThe auditor concludes that the balance is materially misstated when in actual fact it not

Correct answer

D. The auditor concludes that the balance is materially misstated when in actual fact it not

Explanation

The auditor concludes that the balance is materially misstated when in actual fact it not is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

54AuditingMedium

At the planning stage you would NOT consider____________?

Athe timing of the audit

Blast year’s audit

Cwhether corrections from the inventory count have been implemented

Dthe potential use of internal audit

Correct answer

C. whether corrections from the inventory count have been implemented

Explanation

whether corrections from the inventory count have been implemented is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

55AuditingMedium

An auditor should not accept a loan on favourable commercial terms from an audit client because of the threat to his or her independence. The threat would be a___________?

AFamiliarity threat

BSelf-interest threat

CAdvocacy threat

DSelf-review threat

Correct answer

B. Self-interest threat

Explanation

Self-interest threat is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

56AuditingMedium

The basic assumption underlying the use of analytical procedures is:____________?

ARelationship among data exist and continue in the absence of known condition to the contrary

BAnalytical procedures will not be able to detect unusual relationships

CNone of the above.

DIt helps the auditor to study relationship among elements of financial information

Correct answer

A. Relationship among data exist and continue in the absence of known condition to the contrary

Explanation

Relationship among data exist and continue in the absence of known condition to the contrary is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

57AuditingMedium

Pick the odd one:

AEvaluation of internal control

BChecking the vouchers

CPreparation of vouchers

DNone of the above

Correct answer

C. Preparation of vouchers

Explanation

Auditors do not prepare the vouchers , it is not his duty or responsibility to do so.His business is to evaluate the internal control, check, vouch and verify the vouchers.

58AuditingMedium

To test whether sales have been recorded, the auditor should draw a sample from a file of__________?

Asales orders

Bsales invoices

Cbill of loading

Dpurchase orders

Correct answer

B. sales invoices

Explanation

sales invoices is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

59AuditingMedium

The date on auditor’s report should not be____________?

Aearlier than the date on which the accounts are approved by the management

Blater than the date on which the accounts are approved in board’s meeting

CBoth A. and B.

Dthe data of AGM

Correct answer

A. earlier than the date on which the accounts are approved by the management

Explanation

earlier than the date on which the accounts are approved by the management is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

60AuditingMedium

The branch auditor is appointed by___________?

AShareholders in an annual general meeting

BAny of the above

CShareholders in general meeting

DBoard of directors in board meeting

Correct answer

C. Shareholders in general meeting

Explanation

Shareholders in general meeting is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

51AuditingMedium

Which one of the following is NOT considered to be part of planning?

AConsidering whether the financial statements show a true and fair view

BPrevious year’s audit i.e. any qualifications in the report

CConsidering the work to be done by the client staff e.g. internal audit

DBackground i.e. industry

Correct answer

A. Considering whether the financial statements show a true and fair view

Explanation

Considering whether the financial statements show a true and fair view is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

52AuditingMedium

Concurrent audit is a part of____________?

AContinuous audit

BInternal audit system

CInternal check system

DNone of these

Correct answer

B. Internal audit system

Explanation

Internal audit system is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

53AuditingMedium

What would most appropriately describe the risk of incorrect rejection in terms of substantive testing?

AThe auditor has rejected an item for sample which was material

BThe auditor concludes balance is materially correct when in actual fact it is not

CNone of the above

DThe auditor concludes that the balance is materially misstated when in actual fact it not

Correct answer

D. The auditor concludes that the balance is materially misstated when in actual fact it not

Explanation

54AuditingMedium

At the planning stage you would NOT consider____________?

Athe timing of the audit

Blast year’s audit

Cwhether corrections from the inventory count have been implemented

Dthe potential use of internal audit

Correct answer

C. whether corrections from the inventory count have been implemented

Explanation

whether corrections from the inventory count have been implemented is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

55AuditingMedium

An auditor should not accept a loan on favourable commercial terms from an audit client because of the threat to his or her independence. The threat would be a___________?

AFamiliarity threat

BSelf-interest threat

CAdvocacy threat

DSelf-review threat

Correct answer

B. Self-interest threat

Explanation

Self-interest threat is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

56AuditingMedium

The basic assumption underlying the use of analytical procedures is:____________?

ARelationship among data exist and continue in the absence of known condition to the contrary

BAnalytical procedures will not be able to detect unusual relationships

CNone of the above.

DIt helps the auditor to study relationship among elements of financial information

Correct answer

A. Relationship among data exist and continue in the absence of known condition to the contrary

Explanation

57AuditingMedium

Pick the odd one:

AEvaluation of internal control

BChecking the vouchers

CPreparation of vouchers

DNone of the above

Correct answer

C. Preparation of vouchers

Explanation

Auditors do not prepare the vouchers , it is not his duty or responsibility to do so.His business is to evaluate the internal control, check, vouch and verify the vouchers.

58AuditingMedium

To test whether sales have been recorded, the auditor should draw a sample from a file of__________?

Asales orders

Bsales invoices

Cbill of loading

Dpurchase orders

Correct answer

B. sales invoices

Explanation

sales invoices is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

59AuditingMedium

The date on auditor’s report should not be____________?

Aearlier than the date on which the accounts are approved by the management

Blater than the date on which the accounts are approved in board’s meeting

CBoth A. and B.

Dthe data of AGM

Correct answer

A. earlier than the date on which the accounts are approved by the management

Explanation

earlier than the date on which the accounts are approved by the management is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

60AuditingMedium

The branch auditor is appointed by___________?

AShareholders in an annual general meeting

BAny of the above

CShareholders in general meeting

DBoard of directors in board meeting

Correct answer

C. Shareholders in general meeting

Explanation

Shareholders in general meeting is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.