Which of the following is not a method of obtaining audit evidence

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B COM SEMESTER 6

AUDITING AND ASSURANCE

Multiple Choice Questions

1. Which of the following is not a kind of audit? A. Statutory and private. B. Government and continuous audit. C. Interim audit. D. None of these
2. This kind of audit is conducted generally between two annual audits. A. Internal audit. B. Interim audit. C. Final audit. D. Continuous audit.
3. Voucher relates to ______. A. Cash receipt. B. Cash payment. C. Credit transactions D. All of the above.
4. Auditing begins where _____ends. A. Selling. B. Inventory valuation. C. Accounting. D. Purchases.
5. In the case of a company in which not less than _______% of the subscribed share capital is held whether singly or in combination by certain special institutions and bodies, the appointment or re-appointment of auditors shall be made at each annual general meeting by a special resolution. a. 25% b. 30% c. 20% d. 15%
6. Which of the following persons is qualified to be a company auditor? a] An employee of the company b] A body corporate c] A person who is indebted to the company for an amount exceeding Rs. 1000 d] A practicing-chartered accountant
7. When the auditor is an employee of the organization being audited, the audit is classified as _____ a. Internal b. External c. Compliance d. Both A&B
8. A company auditor can be removed before expiry of his term by a] Shareholders

b] Board of Directors c] Central Government d] State Government 9. If there is capital loss, the auditor should a] Not allow payment of dividend b] Allow payment of dividends c] Allow payment of dividends after making such losses good d] None of the above 10. Auditor should see that amount received for premium on issue of shares should be shown in ______ a] Subscribed capital b] Capital Reserve Account c] Share Premium account d] Paid- up capital account 11. Sec of Companies Act 20913 deals with _____ a] Powers and rights of an auditor b] Removal of an auditor c] Appointment of an auditor d] Remuneration of an auditor 12. Internal auditor is appointed by______ a] Management b] Shareholders c] Government d] Statutory body 13. Share premium account should be shown in the Balance sheet under a] Paid-up capital b] Subscribed capital c] Reserves & surplus d] Reserved capital 14. ______ is the medium through which an auditor expresses his opinion on the state of affairs of the client’s business. a] Audit report b] Audit certificate c] Audit programme d] Audit planning 15. _______ is the specific guidelines and directions for efficient and effective completion of the audit work on timely and daily basis, so as to minimise audit risk. a] Audit planning b] Audit report c] Audit programme d] Audit certificate 16. _______ is a method of organising the accounting system of a business concern or a factory by which the duties of various clerks are arranged in such a way that the work of one person is automatically checked by another.

d] All of the above 25. Internal auditor of a company must be _______. a] Cost accountant b] Chartered accountant c] ICWA d] Need not possess any professional qualification 26. Sec [7] provides that in the case of a Government Company or any other company owned or controlled by the Central Government, or by any State Government, the first auditor shall be appointed by _________ a] Comptroller and Auditor-General of India b] Central Government c] State Government d] None of the above 27. Objectives of internal audit includes _________. a] Proper control b] Perfect accounting system c] Asset protection d] All of the above 28. Internal control includes ________. a] Internal audit b] Internal check c] Both internal audit and internal check d] Internal check and external audit 29. _______ is the examination of all documentary evidence which are available to support the authenticity of transactions entered in the client’s records. a] Accounting b] Vouching c] Internal check d] None of the above 30. Sec of the Companies Act 2013 deals with ________. a] Removal of an auditor b] Appointment of an auditor c] Remuneration of an auditor d] None of the above 31. Management audit otherwise called as _______. a] Financial audit b] Efficiency audit c] Cost audit d] Cash audit 32. Audit done by the employees of the business undertaking is called ______. a] Final audit b] Internal audit c] Company audit d] Statutory audit

1. Which of the following is not a kind of audit? a] Statutory and private audit b] Government and continuous audit c] Final, Interim, management audit d] None of the above
2. Effective internal check system reduces a] The liability of auditor b] Work of auditor c] Responsibilities of an auditor d] None of the above
3. Misappropriation of goods may be checked by a] Proper supervision over stock b] Checking of employees c] Punishment of employees d] None of the above
4. Auditor has no lien on a] Audit note book b] Audit working papers c] Books of accounts of clients d] All of the above
5. Accounting standards are prepared by a] SEBI b] RBI c] ASB d] ITA
6. Cost auditor submits reports to the: a] Shareholder b] Board of directors c] Employees d] Creditors
7. Bonus shares are issued to _______. a] New members b] Existing share holders c] Employees d] None of the above
8. Window dressing implies a] Checking wastages b] Under valuation of assets c] Over valuation of assets d] None of the above
9. Internal check is suitable for _______. a] Larger concerns b] Smaller concerns c] Petty-shop keepers

d] All of the above 51. Auditor should determine the ______ and the timing of the audit report. a] Nature b] Actual c] Nature & actual d] Form 52. ______ followed by the enterprise affect the audit plan. a] Accounting policies b] Audit policies c] Accounting and Audit policies d] Management policies 53. While framing an audit plan auditor should ascertain his _____ cast by various legislations on him. a] Limitations b] Duties and obligations c] Rights and powers d] Term of appointment & responsibilities 54. An audit programme is a set of _______ which are to be followed for proper execution of audit. a] Rules b] Policies c] Instructions d] Actions 55. Audit programme provides instructions to the audit staff and reduces scope for a] Understanding b] Misunderstanding c] Negligence d] Liabilities 56. Audit programme helps in fixing the ______for the work done among the audit staff as work done may be traced back to the individual staff members. a] Remuneration b] Liabilities c] Negligence d] Responsibility 57. On completion of an audit _______serves the purpose of audit record which may be useful for future reference. a] Audit programme b] Audit working papers c] Audit plan d] Audit notes 58. Audit programme is prepared by _____ a] The auditor b] The client c] The audit assistant d] The auditor and his audit assistants

1. The auditor has to obtain _______ to substantiate his opinion on the financial statements. a] Internal evidence b] External evidence c] Internal and external evidence d] Sufficient and appropriate evidence

2. The quality of information generated by the audited organization is directly related to the strength of the organization’s ______ a] Internal check b] Internal control c] Internal audit d] All of the above

3. _______ are the documents prepared or obtained by the auditors in connection with the audit. a] Audit notes b] Audit working papers c] Audit report d] All of the above

4. Working papers helps in proper _______ of audit. a] Planning b] Performance c] Planning and performance d] Execution

5. The Auditors Working Papers are divided into two parts a] Permanent audit file and current audit file b] Permanent audit file and temporary audit file c] temporary audit file and current audit file d] current audit file and transitory audit file

6. On appointment of subsequent auditors, the company must give intimation within 7 days of such appointment to ______ a] The board of directors b] The registrar of companies c] The auditor so appointed d] The central government

7. In case the Board of Directors fails to appoint the first auditors within one month of its incorporation the _______ may appoint the first auditors. a] Chairman of the company b] Managing directors c] Members of the company in general meeting d] Central government

8. Examples of casual vacancy are vacancy arising due to _______ a] Resignation of the auditor b] Death of the auditor c] Disqualification of the auditor d] All of the above

9. Whether the management can restrict the scope of work of an external auditor? a] Yes b] No c] In some cases d] If shareholders permit

10. It is the duty of the auditor to ________ to the members of the company on the Accounts examined by him. a] Give suggestions b] Comment c] Refer certain points d] Make a report

11. Auditor’s report is the expert’s opinion expressed by the auditor as to the fairness of_________ a] Financial position b] General position c] Financial statements d] Balance sheet and profit and loss account

12. Auditor report is addressed to the members of the company and is considered at the________ of the company. a] Board Meeting [BM] b] Annual General Meeting [AGM] c] Extraordinary General Meeting [EGM] d] All of the above

13. Due to lack of audit evidence, auditor issues a________ a] Qualified opinion b] Unqualified opinion c] Adverse opinion d] Disclaimer of opinion

14. When auditor does not have any objection regarding the information under audit then he issues an _________ a] Qualified opinion b] Adverse opinion c] Unqualified opinion d] Negative opinion

15. Auditor has to report to_________ a] Management b] Owners c] Government d] Appointing Authority

16. The auditor must have a thorough understanding of the entity, the client’s business strategies, processes, and measurement indicators for critical success. This analysis helps the auditor to. a] Decide if they want to accept the engagement b] Identify risks associated with the client’s strategy that could affect the financial statements c] Assess the level of materiality that is appropriate for the audit

d] Identify the potential for fraud in the financial reporting process 83. Which of the following are performed as risk assessment procedures? a] Observation b] Inquiry c] Analytical Review d] All of these 84. Proper segregation of duties reduces the opportunities in which a person would both a] Establish controls and executes them b] Records cash receipts and cash payments c] Perpetuate errors and frauds and conceals them d] Record the transaction in journal and ledger 85. Misstatements may result from _____. a] An inaccuracy in gathering or processing data from which financial statements are prepared b] An omission of an amount or disclosure c] An incorrect accounting estimates d] All of above 86. Misstatements can arise from . a] Error b] Fraud c] Both [a] and [b] d] None of the above 87. Sufficient audit evidence is a measurement of ______ a] Quality of audit evidence b] Quantity of audit evidence c] Both of [a] and [b] d] None of these 88. Depending upon nature audit evidence can be classified as a] Visual evidence b] Oral evidence c] Documentary evidence d] All of these 89. Depending upon source audit evidence can be classified as a] Internal audit evidence b] External audit evidence c] Both [a] and [b] d] None of the above 90. Which of the following is not internal audit evidence? a] Bank Reconciliation Statement b] Bank Statement c] Copy of Sales Invoice d] Voucher 91. Which of the following is not external audit evidence? a] Bank Statements b] Purchase Invoice c] External Confirmation

b] Verification of accounts c] Examination accounts of propriety concerns d] Enquiry against justification and necessity of expresses e] Audit of Govt. companies 101. Joint audit implies a] Audit of two concerns together b] Audit of joint stock companies c] Audit of joint sector companies d] Audit by two firms of C 102. Systems audit implies a] Systematic examination of accounts b] Audit undertaken to improve auditing systems c] Enquiring accounting and control systems d] Checking the performance of management 103. Internal check is carried on by a] Special staff b] Internal auditor c] Accountant d] None of the above 104. Errors of omission are a] Technical errors b] Error of principle c] Compensating errors d] None of the above 105. Payment for goods purchased should be vouched with the help of a] Creditors statement b] Correspondence with suppliers c] Cash memos d] Ledger accounts 106. Investment should be vouched with the help of a] Commission book b] Brokers book c] Sales deeds d] Minute book 107. Object of verification of assets a] Physical verification of assets b] Checking value of assets c] Examining the authority of their acquisition d] All of the above 108. “Auditor is not valuer” was stated in a] Kingston Cotton Mills case b] London & General Bank case c] Lee. V. Neuchatel Co. Ltd case d] London oil Storage Co. case

1. Book debts should be verified with the help of a] Balance sheet b] Amount received from Debtors c] Debtors schedule d] Certificate from the management

2. A special auditor is appointed by the a] Shareholders b] Board of Directors c] Central Government d] C & A – G

3. A company auditor can be removed before expiry of his term by e] Shareholders f] Board of Directors g] Central Government h] State Government

4. An auditor of Government company has to submit his report to the a] Shareholders b] Central Government c] C & A – G d] Ministry concerned

5. While checking allotment of shares the auditor should see that it is made within a] 100 days of issue of prospectus b] 120 days of issue of prospectus c] 150 days of issue of prospectus d] 80 days of issue of prospectus

6. A company can issue Redeemable Preference shares, if authorized by a] Memorandum of association b] Articles of association c] Companies Act, 1956 d] None of the above

7. Premium received on issue of shares, later forfeited, should be transferred to a] Capital reserve b] Shares forfeited Account c] Capital Account d] None of the above

8. Special resolution means ________. a] 1/3 majority b] 2/3 majority c] ½ majority

9. Auditor is an ________ of a shareholder a] Owner b] Agent

c] Auditor made d] Skeleton 127. A progressive audit programme is also called a _____ programme a] Tailor made b] Man made c] Auditor made d] Skeleton 128. Current audit file consists of _________. a] Matters of future importance b] Matters relations to post years c] Matters relating to the year of audit 129. Test checking is done when there is an effective system of ________. a] Internal control b] Internal audit c] Internal check d] External audit 130. Partial auditing is usually done by a] Sole trading concern b] Joint stock company c] Govt. department 131. Balance remaining in the forfeited Account after reissue is transferred to _______ account a] General reserve b] Capital reserve c] Premium account 132. Criminal liability of an auditor implies liability for a] Misstatement in prospectus b] Failure to assist investigation c] Failure to assist prosecution of guilty officers d] All of the above 133. Statutory liabilities of an auditor include ________. a] Liability under Companies Act 2013 b] Liability under the Indian Penal Code c] Both a&b d] None of the above 134. Powers and rights of an auditor include ________. a] Right of access to the books of account b] Right to obtain information and explanation from officers c] Right to attend general meeting d] All of the above 135. ______ assets are those which may or may not materialise as assets in the future. a] Tangible assets b] Intangible assets

c] Contingent assets d] None of the above 136. Copy right should be revalued at the date of the ________. a] Balance sheet b] Audit report c] Internal check d] None of the above 137. ______ assets are those assets which have no value but represent only expenditure or loss a] Wasting assets b] Fictitious assets c] Intangible assets d] Circulating assets 138. _____ is the value which would be realised if a particular asset is sold when it has become out of date or unserviceable. a] Replacement value b] Scrap value c] Market value d] Book value 139. Vouching is done ______. a] End of the year b] Throughout the year c] Beginning of the year d] None of the above 140. The auditing standards consist of ________. a] Basic postulates b] General standards c] Field standards d] All of the above 141. ______ audit is the process of evaluating a firm’s various operating procedures, code of conduct, and other factors to determine its effect on the society. a] Cost audit b] Performance audit c] Social audit d] Tax audit 142. ______ is an audit based on ownership a] Financial audit b] Secretarial audit c] Trust audit d] None of the above 143. ______ is a method of obtaining audit evidence. a] Observation b] Inspection c] Computation

1. An auditor of a company has a right to be indemnified, out of the assets of the company, for any liability incurred by him in defending himself against any civil or criminal proceedings by the company, provided the judgment is in his favour. a] True b] False
2. Government have established the __________, a specialized, multi- disciplinary organization to deal with cases of corporate fraud. a] Fraud Investigation Office [FIO] b] Serious Frauds Investigation Office [SFIO] c] Corporate Frauds Investigation Office [CFIO] d] None of the above
3. Where the investigation is to be done on behalf of a limited company desiring to buy another established concern, the investigator will be required to examine ________. a] Corporate security b] Goodwill c] Human resources d] None of the above
4. An audit conducted throughout the year or at the regular intervals of time is known as _________. a] Continuous audit b] Internal audit c] Statutory audit d] External audit
5. __________ is a risk that the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated. a] Assurance Engagement Risk b] Assurance Relevance Risk c] Assurance judgment Risk d] None of the above
6. _______ refer to specific accounting controls relating to particular transactions and data in each computer-based application system. a] General controls b] Application controls c] System control d] None of the above
7. The time spent by each worker should be correctly recorded in the _________. a] Attendance card b] Time record book c] Time recording clock d] None of the above
8. Objective of internal check with regard to wages is __________. a] To avoid inclusion of dummy workers in the list of workers b] To avoid errors in the wage sheet

c] To ensure the correctness of time cards and piece work cards d] All of the above 159. In big organizations, generally ___________ employed to push sales and to collect debt. a] Travelling agents b] Marketing executive c] Salesman d] None of the above 160. Cash sales can be done through ________. a] Sales at the counter b] Sales by travelling agents c] Postal sales d] All of the above 161. Payment for wages should be vouched with the help of a] Piece work statement b] Wage sheets c] Minute book d] Bank pass book 162. Which of the following statements is correct? a] Valuation is a part of verification b] Verification is a part of valuation c] Valuation has nothing to do with verification d] Auditor is a valuer 163. Valuation of Fixed Assets is based on the concept a] Going concern b] Conservation c] Money measurement d] Dual aspect 164. Outstanding expenses should be verified with the help of a] Cash book b] Balance book c] Journal proper d] None of the above 165. Investments in hand should be verified with the help of _______. a] Schedule of investments b] Balance sheet c] Inspection of securities d] Certificate from the bank 166. Application money should not be withdrawn unless a] Allotment is made b] Cash book has been prepared c] Certificate to commence business obtained d] Certificate of incorporation obtained 167. Divisible profit should not include

What are the methods of obtaining audit evidence?

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Which of the following is not a technique of obtaining audit evidence Mcq?