Verification of Assets MCQs

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

  1. 1)

    Which of the following is not true with regard to verification of assets?

    • A) It invoices substantiation of occurrence of transactions
    • B) Its objective is to establish existence, ownership, possession, valuation and disclosure of assets
    • C) The auditor has to form an opinion on different aspects
    • D) All are true

  2. 2)

    Which of the following statements is not true ?

    • A) Valuation of assets is the responsibility of management
    • B) The auditor can rely on a certificate issued by an authorized valuationer as to the valuation of assets in the balance sheet
    • C) The auditor should value the asset as per generally accepted accounting principle d) Valuation is no part of auditor’s duty
    • D) Valuation is no part of auditor’s duty

  3. 3)

    An auditor is verifying valuation of building which has been selfconstructed by the client. Which of the following documents is least relevant to the auditor for verification purposes?

    • A) Bills of contractor
    • B) Minutes of meeting of board of directors
    • C) Certificates of engineer and architect
    • D) Loan agreement

  4. 4)

    Which of the following assets is least likely to be subjected to lien?

    • A) Freehold land
    • B) Plant and machinery
    • C) Leasehold property
    • D) Motor vehicles

  5. 5)

    An analysis of fixed assets account has revealed possibility of unrecorded sale of plant and machinery. Which of the following audit procedures may be adopted to discover it?

    • A) Examination of property tax files
    • B) Inquiry of plant manager
    • C) Examination of debits to accumulated depreciation
    • D) All of the above

  6. 6)

    The auditor has noticed existence of recurring losses sale of fixed assets this indicates

    • A) Depreciation charges are insufficient
    • B) Policy of sale or disposal of fixed assets needs to be reviewed
    • C) The sale of assets have not been properly authorized
    • D) Accounting errors

  7. 7)

    Which of the following financial statements assertions are addressed by testing the cut off for plant asset addition

    • A) Existence and ownership
    • B) Valuation and disclosure
    • C) Possession and ownership
    • D) Completeness and valuation

  8. 8)

    The auditor while verifying prepaid insurance has concluded that there is inadequate insurance of building He should__

    • A) Modify his audit report
    • B) Insist it should be disclosed in the notes to financial statements
    • C) Write it in letter of weakness
    • D) Both (b) and (c)

  9. 9)

    While verifying intangible assets, an auditor would recompute amortization charges and determine whether amortization period is reasonable. The auditor tries to establish ….by doing it

    • A) valuation
    • B) existence
    • C) disclosure
    • D) possession

  10. 10)

    When auditing prepaid insurance, an auditor discovers that the insurance policy bond on building is not available for inspection. This may indicate__

    • A) No insurance has been undertaken for building
    • B) Lien on building
    • C) Insurance premium has not been paid
    • D) Insurance premium paid but not recorded