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100+Important Auditing, Accounting, Finance Solved (MCQs) For Senior Auditor Test- Part-2

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Here I Am Give You 100+Important Auditing, Accounting, Finance Solved (MCQs) For Senior Auditor Test- Part-1. I hope I’ts Help You Exam. So Let’s Start Reading…

100+Important MCQs For Senior Auditor Test Here:

Auditing MCQS, Part-2

1. Audit of banks is an example of –

a) Statutory audit b) Balance sheet audit c) Concurrent audit
d) Both (a) and (b) e) All of the above


2. Concurrent audit is a part of­

a) Internal check system b) Continuous audit 

c) Internal audit system d) None


3. In India, balance sheet audit is synonymous to­

 a) Annual audit b) Continuous audit c) Detailed audit d) Statutory audit


4. Audit in depth is synonymous for­

a) Complete audit b) Completed audit c) Final audit d) Detailed audit


5. Balance sheet audit includes verification of_

a) Assets b) Liabilities
c) Income and expense accounts where appropriate d) All of the above

6. 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


7. Which of the following is not a fact of EPA?


a) Economic audit b) Efficiency audit 

c) Expenditure audit d) Effectiveness audit


8. The Delhi Government had constructed six bungalows for its ministers. They are lying unoccupied for the last three years. This would be a matter of concern for­

a) Propriety Auditor b) Performance Auditor

c) Financial Auditor d) None of the above


9. The financial auditor is not concerned with the propriety of business transactions. However, the exceptions to this rule are contained for an audit of limited companies in_


a) Section 227 (IA) of the Companies Act, 1956
b) Section 227 (IA) and section 227(4A) of the Act
c) CARO, 2003 d) Section 227 (IA) and CARO, 2003


10. The balance sheet does not include

a) Verification of assets and liabilities
b) Vouching of income and expense accounts related to assets and liabilities
c) Examination of adjusting and closing entries d) Routine checks


11. 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 stage, the auditor considers materiality at the financial statement level
only

12.…..the audit risk,….. the materiality and ……the audit effort
a) Lower, Higher, Lower b) Lower, Lower, Higher
c) Higher, Lower, Lower d) Lower, Higher, Higher


13. When issuing an 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 is less than materiality level
c) Estimate of the total likely misstatement is more than materially level
d) Estimates of the total likely misstatement cannot be made


14. 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


15. 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


16.Which of the following statements is most closely associated with analytical procedure
applied at substantive stage?
a) It helps to study relationship 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

17.For all audits of financial statements made in accordance with AAS­14, the use of analytical
procedures is at the discretion of the auditor in which stage?
a) Substantive testing b) Planning stage c) Overall review stage d) All of the above


18.The basic assumption underlying the use of analytical procedures is :
a) It helps the auditor to study relationship among elements of financial information
b) Relationship among data exist and continue in the absence of known condition to the
contrary
c) Analytical procedures will not be able to detect unusual relationships
d) None of the above.


19.What are analytical procedures?
a) Substantive tests designed to assess control risk
b) Substantive tests designed to evaluate the validity of management’s representation letter
c) Substantive tests designed to study relationships between financial and non­financial
d) All of the above


20.Which of the following is not an analytical procedure?
a) Tracing of purchases recurred in the purchase book to purchase invoices. b) Comparing aggregate wages paid to number of employees
c) Comparing the actual costs with standard costs
d) All of them are analytical procedure


21.When applying analytical procedures, an auditor could develop independent estimate of an
account balance to compare it to­ a) client’s unedited account balance
b) client’s unedited account balance adjusted for trends in the industry
c) Prior year audited balance
d) Prior year audited balance adjusted for trends in the industry


22.What is the primary objective of analytical procedures used in the overall review stage of an
audit?
a) To help to corroborate the conclusions drawn from individual components of financial
statements
b) To reduce specific detection risk
c) To direct attention to potential risk areas
d) To satisfy doubts when questions arise about a client’s ability to continue

23. Of the following, which is the least persuasive type of audit evidence?


a) Bank statements obtained from the client
b) Documents obtained by an auditor from third parties directly. c) Carbon copies of sales invoices inspected by the auditor
d) Computations made 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) The effective internal control system provides reliable audit evidence
c) Evidence obtained from outside sources routed through the client
d) All are correct.


25. In an audit of financial statements, substantive tests are audit procedures that __

a) may be 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) may be a test of transactions, a test of balance and analytical procedures

26. The nature, timing, and extent of substantive procedures are related to assessed level of control risk?


a) randomly b) disproportionately c) directly d) inversely


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 evidenced) The independence of the source of evidence


28. When is the evidential matter, generally, considered sufficient?


a) When it constitutes the entire population
b) When it is enough to provide a basis for giving reasonable assurance regarding truthfulness
c) When it is objective and relevant
d) When auditor collects and evaluates it independently


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

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


a) Authenticated copy of relevant minutes of meetings may be regarded as management representation
b) It should always be in working
c) It may be dated prior to the report dated) It should be addressed to the auditor

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