Preparation of Audit MCQs



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


  1. 11)

    The current file of the auditor’s working papers, generally, should include


    • A) a flowchart of the internal controls
    • B) Organisation charts
    • C) a copy of financial statements
    • D) copies of bond and debentures

  2. 12)

    Knowledge of the entity’s business does not help the auditor to


    • A) reduce inherent risk
    • B) identify problem areas
    • C) evaluate reasonableness of estimates
    • D) evaluate appropriates of GAAP.

  3. 13)

    The main advantage of using statistical sampling techniques is that such techniques:


    • A) mathematically measure risk
    • B) eliminate the need for judgmental sampling
    • C) defines the values of tolerable error
    • D) all of the them.

  4. 14)

    Which of the following methods of sample selection is least suitable for extrapolating results to the population?


    • A) Systematic sampling
    • B) Random sampling
    • C) Haphazard sampling
    • D) None

  5. 15)

    Which of the following statements is correct?


    • A) Lower the sampling risk greater the sample size
    • B) Smaller the tolerable error, greater the sample size
    • C) Lower the expected error, smaller the sample size
    • D) All are correct

  6. 16)

    Which of the following features is most important for randombased selection?


    • A) Sample should be drawn form population
    • B) Every strata of population should be represented in the sample
    • C) Every item in the population has an equal chance of being selected in the sample
    • D) Items should be selected at ‘n’ th interval

  7. 17)

    Risk of under reliance is the risk that the sample selected to test controls___


    • A) Does not support the auditor’s planned assessed level of control risk when the true operating effectiveness of the control structure justifies such an assessment

    • B) Supports the auditor’s planned assessed level of control risk when the actual position does not warrant such reliance
    • C) Is not supported by adequate documents
    • D) both (a) & (c)

  8. 18)

    Which of the following factors is (are) considered in determining the sample size for tests of control?


    • A) Projected error
    • B) Tolerable error
    • C) Expected error
    • D) Both (b) and (c)

  9. 19)

    Tolerable error, is the maximum monetary error that the auditor is prepared to accept in the population and still conclude that audit objective has been achieved, is directly related to


    • A) Sample size
    • B) Audit risk
    • C) Materiality
    • D) Expected error