MCQsAuditing MCQsIntroduction to Auditing MCQs036 Share on Facebook Tweet on Twitter Question #1: The main object of an audit is Expression of opinion Detection and Prevention of fraud and error Both (a) and (b) Depends on the type of auditQuestion #2: The title of AAS2 issued by Council of ICAI is Objective and Scope of the Financial Statements Objective and Scope of the Audit of Financial Statements Objective and Scope of Business of an Entity Objective and Scope of Financial Statements AuditQuestion #3: Both auditing and accounting are concerned with financial statements. Which of the following Auditing uses the theory of evidence to verify the financial information made available by Accountancy Auditing lends credibility dimension and quality dimension to the financial statements prepared by the accountant. Auditor should have through knowledge of accounting concepts and convention to enable him to express an opinion on financial statements All of the above.Question #4: Which of the following is not true about opinion on financial statements? The auditor should express an opinion on financial statements. His opinion is no guarantee to future viability of business He is responsible for detection and prevention of frauds and errors in financial statements He should examine whether recognised accounting principle have been consistentlyQuestion #5: A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of Error of omission Error of commission Compensating error Error of principleQuestion #6: Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example of Error of principle Error of commission Error of omission Error of duplicationQuestion #7: Which of the following statements is not true Management fraud is more difficult to detect than employee fraud Internal control system reduces the possibility of occurrence of employee fraud and management fraud The auditor’s responsibility for detection and prevention of errors and frauds is similar. All statements are correct.Question #8: As per AAS4 if auditor detects an error then He should inform the management He should communicate it to the management if it is material The auditor should ensure financial statements are adjusted for detected errors Both (b) and (c)Question #9: Which of the following is not a limitation of audit as per AAS4? Objectivity of auditor’s judgment Selective testing Persuasiveness of evidence Limitations of internal control systemQuestion #10: How many principles are listed in AAS1 which govern auditor’s professional obligation? Nine Fourteen Seven EightQuestion #11: The risk of management fraud increases in the presence of Frequent changes in supplies Improved internal control system Substantial increases in sales Management incentive system based on sales done in a quarterQuestion #12: Auditing standards differ from audit procedures in that procedures relate to Audit assumptions acts to be performed quality criterion methods of workQuestion #13: Which of the following factors likely to be identified as a fraud factor by the auditor? The company is planning a initial public offer of quality shares to raise additional capital for expansion Bank reconciliation statement includes deposits in transit Plant and machinery is sold at a loss The company has made political contributionsQuestion #14: The most difficult type of misstatement to detect fraud is based on Related party purchases Related party sales The restatement of sales Omission of a sales transaction from being recordedQuestion #15: Which of the following statements is correct concerning the required documentation in working papers of fraud risk assessment undertaken by the auditor? All risk factors as mentioned in AAS4, should be considered and documented along with response to them Document the identification of fraud risk factors along with response to them Document material fraud, risk factors and response to them No documentation in requiredQuestion #16: Which of the following is not likely to be a fraud risk factor relating to management’s characteristics Tax evasion Failure to correct known weakness in internal control system Adoption of conservative accounting principles High management turnoverQuestion #17: Professional skepticism requires that the auditor assume that management is reasonably honest Neither honest nor dishonest Not necessarily honest Dishonest unless proved otherwiseQuestion #18: The audit engagement letter, generally, should include a reference to each of the following except limitations of auditing responsibilities of management with respect to audit work expectation of receiving a written management representation letter a description of the auditor’s method of sample selectionCongratulations, you passed!I'm sorry but you did not achieve the required score.