Auditing MCQs

Page No. 5

Which of the following factors is most important in determining the appropriations of audit evidence?


aThe reliability of audit evidence and its relevance in meeting the audit objective

✓


bThe objectivity and integrity of the auditor

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cThe quantity of audit evidence

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dThe independence of the source of evidence

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What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing?


aThe auditor has ascertained that the balance is materially correct when in actual fact it is not

✓


bThe auditor concludes the balance is materially misstated when in actual fact is not

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cThe auditor has rejected an item from sample which was not supported by documentary evidence

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dHe applies random sampling on data which is inaccurate and inconsistent

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


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

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

✓


cThe auditor has rejected an item for sample which was material

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dNone of the above

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Which of the following statements is not true with respect to management representations obtained as per AAS­11?


aAuthenticated copy of relevant minutes of meetings may be regarded as management representation

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b It should always be in working

✓


cIt may be dated prior to the report date

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d It should be addressed to the auditor

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Which of the following affects audit effectiveness?


aRisk of over reliance

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bRisk of incorrect rejection

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cRisk of incorrect acceptance

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dBoth A. and C.

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View Answer Both A. and C.

Which of the following is not a corroborative evidence?


aMinutes of meetings

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bConfirmations from debtors

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cInformation gathered by auditor through observation

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dWorksheet supporting consolidated financial statements

✓



When is evidential matter, generally, considered sufficient?


aWhen it constitutes entire population

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bWhen it is enough to provide a basis for giving reasonable assurance regarding truthfulness

✓


cWhen it is objective and relevant

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dWhen auditor collects and evaluates it independently

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Which of the following statements is, generally, correct about the reliability of auditevidence?


aTo be reliable, evidence should conclusive rather than persuasive

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bEffective internal control system provides reliable audit evidence

✓


cEvidence obtained from outside sources routed through the client

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dAll are correct.

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The nature, timing and extent of substantive procedures is _________ related to assessed level of control risk?


arandomly

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bdisproportionately

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cdirectly

✓


dinversely

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View Answer directly

In an audit of financial statements, substantive tests are audit procedures that___________?


amay be eliminated for an account balance under certain conditions

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b are designed to discover significant subsequent events

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c will increase proportionately when the auditor decreases the assessed level of control risk

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dmay be test of transactions, test of balance and analytical procedures

✓



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