Auditing - Questions and Answers for Competitive Exams | GkSeries

25. The work of one clerk is automatically check by another clerk is called _________.

• [A] Internal control.
• [B] Internal check.
• [C] Internal audit.
• [D] None of the above.

Answer: Option [B]

26. The owners of the company are called __________.

• [A] Debenture holders.
• [B] Debtors
• [C] Shareholders
• [D] None of the above.

Answer: Option [C]

27. The main objects of investigation is _________.

• [A] to discover errors and frauds.
• [B] to prevent errors and frauds.
• [C] to verify statements.
• [D] all the above

Answer: Option [D]

28. Share may be issued _____________.

• [A] at par.
• [B] at premium.
• [C] at discount.
• [D] all the above.

Answer: Option [D]

29. The liabilities of an auditor can be _________.

• [A] Civil
• [B] Criminal
• [C] Civil and Criminal.
• [D] Official

Answer: Option [C]

30. Internal auditor of a company must be _______________.

• [A] Cost accountant.
• [B] Chartered accountant.
• [C] ICWA
• [D] need not possess any professional qualification.

Answer: Option [B]

31. A vacancy caused by resignation of an auditor is filled by _________.

• [A] board of directors.
• [B] managing director.
• [C] general meeting.
• [D] central government.

Answer: Option [C]

32. Cost audit under section 233(b) of the companies act is ___________.

• [A] voluntary
• [B] compulsory
• [C] advisable
• [D] avoidable

Answer: Option [C]

33. When at an annual general meeting of a company no auditor is appointed or reappointed. In that case ________

• [A] the central government appoints a person to fill the vacancy
• [B] the board of directors appoints a person to fill the vacancy.
• [C] the managing director of the company appoints a person to fill the vacancy.
• [D] none of these can appoint a person to fill the vacancy.

Answer: Option [A]

34. The most difficult type of misstatement to detect fraud is based on __________.

• [A] related party purchases.
• [B] related party sales.
• [C] the restatement of sales.
• [D] omission of a sales transaction from being recorded.

Answer: Option [D]

35. Professional skepticism requires that the auditor assume that management is _________.

• [A] reasonably honest.
• [B] neither honest nor dishonest.
• [C] not necessarily honest.
• [D] dishonest unless proved otherwise.

Answer: Option [B]

36. The use of an audit engagement letter is the best method of assuring the auditor will have which of the following?

• [A] Auditor will obtain sufficient appropriate audit evidence.
• [B] Management representation letter.
• [C] Access to all books, accounts and vouchers required for audit purpose.
• [D] Co-operation from other auditors

Answer: Option [C]