auditing mcqs

Adverse opinion

Unqualified report with ‘an emphasis of matter’ paragraph;

Disclaimer of opinion

Qualified opinion

Estimates of the total likely misstatement cannot be made

Amount of known misstatement is documented in working papers

Estimates of the total likely misstatement is less than materiality level

Estimate of the total likely misstatement is more than materially level

Prior year audited balance adjusted for trends in the industry

Prior year audited balance

client’s unedited account balance adjusted for trends in the industry

client’s unedited account balance

Positive assurance

No assurance

High level of assurance

Negative assurance

To reduce specific detection risk

To direct attention to potential risk areas

To help to corroborate the conclusions drawn from individual components of financial statements

To satisfy doubts when questions arise about a client’s ability to continue

It helps to accumulate evidence supporting the validity of a specific account balance

It helps to discover material misstatements in the financial statements

It helps to study relationship among balance sheet accounts

It helps to identify possible oversights

The gap between how the directors of a company perform their duties and how the shareholders expect them to perform

The gap between the auditors’ own perception of their duties and how they are set out in the Companies Act

The gap between the public perception of the role of company auditors and their statutory role and responsibilities

The gap between how the directors of a company perform their duties and how the general public expects them to perform

The auditor cannot give an opinion due to lack of evidence.

The auditor did not find anything to indicate that a material misstatement exists.

The auditor could not conduct any tests due to lack of controls.

The client’s financial statements were found to be materially misstated.

Substantive tests designed to study relationships between financial and non­financial

All of the above

Substantive tests designed to evaluate the validity of management’s representation letter

Substantive tests designed to assess control risk

Examining the journal and ledger

Examining the physical existence and valuation of assets.

Examination of vouchers related to assets.

None of the above.

bill of loading

sales orders

purchase orders

sales invoices

the conclusion of next annual general meeting

the conclusion of statutory meeting

the date of removal

the conclusion of first annual general meeting

earlier than the date on which the accounts are approved by the management

later than the date on which the accounts are approved in board’s meeting

Both and

the data of AGM

Board of directors in board meeting

Any of the above

Shareholders in general meeting

Shareholders in an annual general meeting

It helps the auditor to study relationship among elements of financial information

None of the above.

Analytical procedures will not be able to detect unusual relationships

Relationship among data exist and continue in the absence of known condition to the contrary

the shareholders in a general meeting

the board of directors

the Central Government

the shareholders in the first annual General meeting

Any of these

recompute accrued income on the data of balance sheet

ensure proper disclosure in the balance sheet

identify cases of unrecorded revenue

Obtain information and explanation from the employees and officers

Obtain information and explanation necessary for the purpose of audit

Both and

Obtain information and explanation

Examination of adjusting and closing entries

Testing of accounts and records

Checking of all transactions recorded

Checking of selected number of transactions

To hear

To examine

To investigate

To inspect

Cost

Cost or Market price whichever is lower.

Cost less depreciation.

Market price

Non-financial information

Both (a) and (b)

Financial information

None of these

Government

Management

Law

Shareholders

Error of commission

Compensating error

Error of omission

Error of principle

Management’s integrity

Control risk

Auditor’s qualification

Auditor’s experience and professional judgment