Auditing Multiple Choice Questions#10



NOTE: Attempt all Questions to see the Result at the bottom of this page.


  1. 1)

    Which one of the following matters should be included in the letter of representation?


    • A) Existence of any immaterial mistake in the statements
    • B) Existence of any fraud or error in the statements
    • C) Company growth trend in the future in figures
    • D) Market value of the company stock

  2. 2)

    Who should prepare the annual capital expenditure budgets of the company in order to keep effective?


    • A) Someone directly responsible to the shareholders
    • B) Someone directly responsible for goods delivery to the customers
    • C) Someone directly responsible to the board of directors
    • D) Someone directly responsible to deal with the suppliers

  3. 3)

    IFRS stands for which one of the following?


    • A) International Financial Reporting Standards
    • B) International Financial Recording Systems
    • C) International Financial Recording Statements
    • D) International Financial Reporting Systems

  4. 4)

    When an auditor increases the assessed level of control risk because certain control activities were determined to be ineffective, which of the following would most likely be increased by the auditor?


    • A) Extent of tests of controls
    • B) Level of detection risk
    • C) Extent of tests of details
    • D) Level of inherent risk

  5. 5)

    Which of the following is one of the most fundamental and effective internal controls?


    • A) Increased use of computers for recording accounting transactions
    • B) Increased reliance on internal auditors to monitor accounting systems
    • C) Segregation of incompatible duties across several people
    • D) Having internal auditors report only to the Board of Directors

  6. 6)

    Tracing selected shipments to the sales journal to be sure that each one is included is a test of which of the following?


    • A) Accuracy
    • B) Classification
    • C) Completeness
    • D) Existence

  7. 7)

    Which one of the following is most likely to indicate fraud?


    • A) Several over payments are made for goods received from a supplier
    • B) The year end cash balance does not include cash in transit to the company at year-end
    • C) A check received after year end was inadvertently recorded as if received before year-end
    • D) A documented loan is sanctioned to an officer of the company

  8. 8)

    While testing the purchase system of an entity, which one of the following control tests may be applied to the Credit Notes by the auditors?


    • A) Evidence of matching credit notes to goods returned notes
    • B) Evidence of approval of credit notes
    • C) Evidence of a sequence check
    • D) Proof of issuance date

  9. 9)

    During the audit work of testing the purchase system of an entity, which one of the following control tests may be applied to the Payables Ledger by the auditors?


    • A) Evidence of authorization of adjustments to payables ledger
    • B) Evidence of review of reconciliation of purchase ledger listing
    • C) Evidence of authorization of adjustments to payable ledger control account
    • D) Evidence of authorization of adjustments to purchase ledger

  10. 10)

    Which one of the following possible misstatements related to payroll does not involve the audit objective of Validity?


    • A) Payments to fictitious employees
    • B) Payments to terminated employees
    • C) Payments to valid employees who have not worked
    • D) Payments to valid employees at a rate in excess of the authorized amount