Concepts of Auditing MCQs



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


  1. 11)

    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

  2. 12)

    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

  3. 13)

    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

  4. 14)

    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.

  5. 15)

    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

  6. 16)

    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

  7. 17)

    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

  8. 18)

    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