Auditing MCQs

Page No. 2

Which one of the following is part of the auditor’s function?


aConducting the inventory count


bObtaining and evaluating audit evidence on the financial statements


cCalculating the year-end accruals figure for inclusion in the accounts


dProviding representations to management



What sort of assurance is provided in a review engagement?


aPositive assurance


bNegative assurance


cHigh level of assurance


dNo assurance


View Answer Negative assurance

Which of the following statements is correct?


aWhen a company negotiates a ‘friendly’ takeover, it usually appoints a firm of accountants to carry out due diligence on the takeover target.


bIn an attestation engagement, the accountant is required to report on the quality of work performed.


cIn a review engagement, evidence is gathered mainly by means of computation and inspection.


d In an engagement to review financial statements, the amount of work required is the same as for an audit



For companies required to produce interim financial statements (IFI):


aone audit firm should audit the IFI and a different firm should audit the financial statements for the year as a whole.


bone accountancy firm should review the IFI and a different firm should audit the financial statements for the year as a whole.


cthe same firm should audit the IFI and the financial statements for the year as a whole.


dthe same firm should review the IFI and the financial statements for the year as a whole.



What is meant by negative assurance?


aThe auditor cannot give an opinion due to lack of evidence.


bThe client’s financial statements were found to be materially misstated.


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


dThe auditor did not find anything to indicate that a material misstatement exists.



The auditor should examine subsequent realization of revenue such as dividends, interest,commission, etc to:­_____________?


aidentify cases of unrecorded revenue


bensure proper disclosure in the balance sheet


crecompute accrued income on the data of balance sheet


dAny of these



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


apurchase orders


bsales orders


csales invoices


dbill of loading


View Answer sales invoices

Which of the following documents is not relevant for vouching cash sales?


aDaily cash sales summary


b Salesmen’s summary


cMonthly statements sent to customers


dBank statement



The client changed method of depreciation from straight line to written down value method. This has been disclosed as a note to the financial statements. It has an immaterial effect on the current financial statements. It is expected, however, that the change will have a significant effect on future periods. Which of the following option should the auditor express?


aUnqualified opinion


b Qualified opinion


cDisclaimer of opinion


dAdverse opinion


View Answer Unqualified opinion

Which of the following is true about explanatory notes?


aThese are given by the directors of the company


bThese are given to adhere to requirements of section 211.


cThese are given by auditors of the company in auditor’s report


dAll of the above



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