Auditing Multiple Choice Questions#9



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


  1. 1)

    Stratification is a process of dividing a population into sub- populations which have


    • A) Heterogeneous characteristics
    • B) Nothing in common
    • C) A lot of sampling units
    • D) Homogeneous characteristics

  2. 2)

    Test of controls comprise of testing of all EXCEPT


    • A) Design
    • B) Implementation
    • C) Operating efficiency
    • D) Operating effectiveness

  3. 3)

    Analytical procedures are carried out for which one of the following purposes?


    • A) To reduce detection risk
    • B) To assess inherent risk
    • C) To reduce control risk
    • D) To determine detection risk

  4. 4)

    The auditors are required to perform tests of controls when


    • A) The internal controls are operating inefficiently
    • B) Substantive procedures alone provide sufficient appropriate audit evidence at the assertion level.
    • C) Substantive procedures alone do not provide sufficient appropriate audit evidence at the assertion level.
    • D) Analytical procedures alone do not provide sufficient appropriate audit evidence at the assertion level.

  5. 5)

    Following descriptions are the examples of substantive testing EXCEPT:


    • A) Test of account balances to verify the correctness of the amounts
    • B) Verification that an operating system and/or applications are configured appropriately to the companies needs
    • C) Review of minutes of directors; meetings and inquiry
    • D) Use of statistical sampling to determine the accuracy of financial statement figures

  6. 6)

    How often Inventory levels should be checked against the inventory records in order to keep its control effectively?


    • A) Rarely
    • B) Periodically
    • C) Never
    • D) Daily

  7. 7)

    What auditors seek in the register of non current assets for each major group of assets?


    • A) Details of each item its cost and residual value
    • B) Details of each item its cost and accumulated depreciation
    • C) Details of each item its cost and depreciation
    • D) Details of each item its cost and capital investment expected returns

  8. 8)

    Which one of the following may not be any matter relevant to verification of assets?


    • A) Taxation
    • B) Vouching
    • C) Insurance
    • D) The letter of representation

  9. 9)

    An Automobile Company hires auditors at the year end. Auditors are at the stage of verification and vouching of company financials. Before examining the equity section they develop general aspects concerning the owner equity. In your opinion which one of the following aspects may NOT be considered by the auditors during this assessment?


    • A) Share capital is properly classified and described in the accounts
    • B) Capital stock is enough to execute the company financial needs
    • C) Reserves are properly classified and presented
    • D) Movements in reserves are properly authorized

  10. 10)

    Non current assets manufactured or constructed by the company itself should reflect which types of costs in the costing records?


    • A) Direct costs plus relevant overhead but not include any profit
    • B) Direct costs plus relevant overhead and any profit earned on it
    • C) Indirect costs plus relevant overhead but not include any profit
    • D) Indirect costs plus relevant overhead and any profit earned on it