Auditing General Knowledge Quiz | Auditing General Knowledge Short Questions & Answers

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Questions
41 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
42 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.
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43 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.
44 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

Answer: It helps to accumulate evidence supporting the validity of a specific account balance
45 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
46 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
47 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 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

Answer: Estimates of the total likely misstatement is less than materiality level
48 ______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
49 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
50 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
51 Errors of Omission are_____________?
A Technical errors
B Errors of principle
C Compensating errors
D None of the above

Answer: Technical errors
52 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
53 Which of the following statements is not true about continuous audit?
A It is conducted at regular interval
B It may be carried out on 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
54 Institute of Chartered Accountants of Pakistan was established in____________?
A 1949
B 1956
C 1961
D 1972

Answer: 1961
55 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
56 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
57 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
58 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 test of transactions, test of balance and analytical procedures

Answer: May be test of transactions, test of balance and analytical procedures
59 The nature, timing and extent of substantive procedures is related to assessed level of control risk
A Randomly
B Disproportionately
C Directly
D Inversely

Answer: Directly
60 Which of the following is not corroborative evidence?
A Minutes of meetings
B Confirmations from debtors
C Information gathered by auditor through observation
D Worksheet supporting consolidated financial statements

Answer: Worksheet supporting consolidated financial statements

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