Auditing Multiple Choice Questions And Answers PDF Download: Auditing Multiple Choice Questions have been around for a long time. You’ve probably encountered them in some form or another whether you’ve actually read these or have just skimmed over a topic. Additionally, these types of questions and answers can be tricky since there might be answers that seem to “fit” but are incorrect. These Auditing Solved MCQs PDF is prepared by our special livemcqs team.
Auditing Multiple Choice Questions And Answers PDF
1. Which of the following statements is not true?
A. Management fraud is more difficult to detect than employee fraud
B. Internal control system reduces the possibility of occurrence of employee fraud and management fraud
C. The auditor’s responsibility for the detection and prevention of errors and frauds is similar.
D. All statements are correct.
Answer: Internal control system reduces the possibility of occurrence of employee fraud and management fraud
2. Internal audit is undertaken:
A. By independent auditor
B. Statutorily appointed auditor
C. By a person appointed by the management
D. By a government auditor
Answer: By a person appointed by the management
3. The scope of internal audit is decided by the___________?
A. Shareholders
B. Management
C. Government
D. Law
Answer: Management
4. Audit of banks is an example of_____________?
A. Statutory audit
B. Balance sheet audit
C. Concurrent audit
D. All of the above
Answer: All of the above
5. Concurrent audit is a part of____________?
A. Internal check system
B. Continuous audit
C. Internal audit system
D. None of these
Answer: Internal audit system
6. Audit in depth is synonymous for____________?
A. Complete audit
B. Completed audit
C. Final audit
D. Detailed audit
Answer: Detailed audit
7. Institute of Chartered Accountants of Pakistan was established in____________?
A. 1949
B. 1956
C. 1961
D. 1972
Answer: 1961
8. Which of the following statements is not true about a continuous audit?
A. It is conducted at regular interval
B. It may be carried out on a daily basis
C. It is needed when the organization has a good internal control system
D. It is expensive
Answer: It is needed when the organization has a good internal control system
9. Internal check is carried on by___________?
A. Staff specially appointed for the purpose
B. Internal auditor
C. Supervisor of the staff
D. Members of the staff
Answer: Members of the staff
10. Errors of Omission are_____________?
A. Technical errors
B. Errors of principle
C. Compensating errors
D. None of the above
Answer: Technical errors
11. Window dressing implies_______________?
A. Curtailment of expenses
B. Checking of Wastages
C. Under valuation of assets
D. Over Valuation of assets
Answer: Over Valuation of assets
12. Test Checking refers to___________?
A. Testing of accounts and records
B. Checking of selected number of transactions
C. Examination of adjusting and closing entries
D. Checking of all transactions recorded
Answer: Checking of selected number of transactions
13. 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
Answer: At the planning state, the auditor considers materiality at the financial statement level only
14. ______the audit risks _______ the materiality and _________ the audit effort.
A. Lower, Higher, Lower
B. Lower, Lower, Higher
C. Higher, Lower, Lower
D. Lower, Higher, Higher
Answer: Lower, Higher, Lower
15. 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 are less than the materiality level
C. Estimate of the total likely misstatement is more than materially level
D. Estimates of the total likely misstatement cannot be made
Answer: Estimates of the total likely misstatement is less than the materiality level
16. 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
Answer: The auditor’s remuneration
17. 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
Answer: All of the above
18. Which of the following statements is most closely associated with the analytical procedure applied at the substantive stage?
A. It helps to study relationships 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
Answer: It helps to accumulate evidence supporting the validity of a specific account balance
19. Verification refers to_________?
A. Examining the physical existence and valuation of assets.
B. Examining the journal and ledger
C. Examination of vouchers related to assets.
D. None of the above.
Answer: Examining the physical existence and valuation of assets.
20. Stock should be valued at_________?
A. Cost
B. Market price
C. Cost or Market price whichever is lower.
D. Cost less depreciation.
Answer: Cost or Market price whichever is lower.
21. Floating assets are valued at____________?
A. Cost
B. Market price
C. Cost or market price whichever is lower
D. Cost less depreciation
Answer: Cost or market price whichever is lower
22. Goods sold on the basis of sales or return should:
A. Be included in the stock
B. Not be included in the stock
C. Not be checked by auditor
D. None of the above
Answer: Be included in the stock
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
Answer: Carbon copies of sales invoices inspected 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.
Answer: Effective internal control system provides reliable audit evidence
25. In an audit of financial statements, substantive tests are audit procedures that __________?
A. Maybe 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. Maybe test of transactions, a test of balance, and analytical procedures
Answer: Maybe a test of transactions, a test of balance, and analytical procedures
26. The nature, timing, and extent of substantive procedures are related to the assessed level of control risk
A. Randomly
B. Disproportionately
C. Directly
D. Inversely
Answer: Directly
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
Answer: The reliability of audit evidence and its relevance in meeting the audit objective
28. When is evidential matter, generally, considered sufficient?
A. When it constitutes an entire population
B. When it is enough to provide a basis for giving reasonable assurance regarding the truthfulness
C. When it is objective and relevant
D. When the auditor collects and evaluates it independently
Answer: When it is enough to provide a basis for giving reasonable assurance regarding the truthfulness
29. Which of the following is not corroborative evidence?
A. Minutes of meetings
B. Confirmations from debtors
C. Information gathered by the auditor through observation
D. Worksheet supporting consolidated financial statements
Answer: Worksheet supporting consolidated financial statements
Auditing Multiple Choice Questions And Answers PDF
Auditing multiple choice questions and answers are more useful than ever before. The Auditing Concept Statement provides a framework for all auditors no matter what the sector, industry, or function area. This concept is important irrespective of the organization’s size and complexity.
The purpose of auditing is to verify the authenticity and reliability of the financial and related information.
The audit process includes a detailed examination of the financial statements, internal control system, as well as processes, and management practices in an organization.
The audit process also includes verification of transactions and balances through the examination of documents, inquiries, and observation.
Auditing is a way for your company to ensure that it is operating with integrity. It helps to validate accounting records, identify any inconsistencies or errors and determine whether the numbers reflect what’s really happening within your business.