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Free download in PDF Auditing General Knowledge Multiple Choice Questions(MCQs) & Answers for competitive exams. These short objective type questions with answers are very important for Board exams as well as competitive exams. These short solved questions or quizzes are provided by Gkseries.
(1)
The independent auditor’s primary responsibility is to______________?
[A]
the directors
[B]
the company’s creditors (payables)
[C]
the company’s bank
[D]
the shareholders
(2)
Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of the auditor?
[A]
The shareholders in a general meeting
[B]
The managing director
[C]
The board of directors in a board meeting
[D]
The audit committee
Answer: The shareholders in a general meeting
(3)
Which one of the following is NOT a duty of the auditor?
[A]
Duty to report to the company’s bankers
[B]
Duty to report to the members
[C]
Duty to sign the audit report
[D]
Duty to report on any violation of law
Answer: Duty to report to the company’s bankers
(4)
When an auditor is proposed for removal from office, which one of the following is he NOT permitted to do?
[A]
Circulate representations to members
[B]
Apply to the court to have the proposal removed
[C]
Speak at the AGM/EGM where the removal is proposed
[D]
Receive notification of the AGM/EGM where the removal is proposed
Answer: Apply to the court to have the proposal removed
(5)
A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of____________?
[A]
Error of omission
[B]
Error of commission
[C]
Compensating error
[D]
Error of principle
Answer: Error of commission
(6)
Which of the following is not true about opinion on financial statements?
[A]
The auditor should express an opinion on financial statements.
[B]
His opinion is no guarantee to future viability of business
[C]
He is responsible for detection and prevention of frauds and errors in financial statements
[D]
He should examine whether recognised accounting principle have been consistently
Answer: He is responsible for detection and prevention of frauds and errors in financial statements
(7)
International auditing standards are issued by the______________?
[A]
International Accounting Standards Board
[B]
International Federation of Accountants
[C]
International Standards Board
[D]
Auditing Practices Board
Answer: International Federation of Accountants
(8)
Which of the following is NOT the responsibility of a company’s directors?
[A]
Reporting to the shareholders on the accuracy of the accounts
[B]
Establishment of internal controls
[C]
Keeping proper accounting records
[D]
Supplying information and explanations to the auditor
Answer: Reporting to the shareholders on the accuracy of the accounts
(9)
Why do auditors concentrate their efforts on material items in accounts?
[A]
Because they are easier to audit
[B]
Because it reduces the audit time
[C]
Because the risk to the accounts of their being incorrectly stated is greater
[D]
Because the directors have asked for it
Answer: Because the risk to the accounts of their being incorrectly stated is greater
(10)
The concept of stewardship means that a company’s directors________________?
[A]
Are responsible for ensuring that the company complies with the law
[B]
Are responsible for ensuring that the company pays its tax by the due date
[C]
Safeguard the company’s assets and manage them on behalf of the shareholders
[D]
Report suspected fraud and money laundering to the authorities
Answer: Safeguard the company’s assets and manage them on behalf of the shareholders
(11)
The fundamental objective of the audit of a company is to_____________?
[A]
Protect the interests of the minority shareholders
[B]
Detect and prevent errors and fraud
[C]
Assess the effectiveness of the company’s performance
[D]
Attest to the credibility of the company’s accounts
Answer: Attest to the credibility of the company’s accounts
(12)
Concealment of shortage by delaying the recording of cash receipts is known as_____________?
[A]
Embezzlement
[B]
Misappropriation
[C]
Lapping
[D]
None of these
(13)
Auditing is compulsory for____________?
[A]
Small scale business
[B]
Partnership firms
[C]
Joint stock Companies
[D]
Proprietary Concerns
Answer: Joint stock Companies
(14)
Process of verifying the documentary evidences of transactions are known as___________?
[A]
Auditing
[B]
Testing
[C]
Vouching
[D]
Verification
(15)
An auditor is like a_______________?
[A]
Blood haunt
[B]
Watch dog
[C]
May both according to situation
[D]
None of these
(16)
The main object of an audit is _____________?
[A]
Expression of opinion
[B]
Detection and Prevention of fraud and error
[C]
Both (A) and (B)
[D]
Depends on the type of audit
Answer: Depends on the type of audit
(17)
The term ‘Audit’ is derived from a Latin word “audire” which means___________?
[A]
To inspect
[B]
To examine
[C]
To hear
[D]
To investigate
(18)
____________ is a systematic examination of the books and records or a business?
[A]
Auditing
[B]
Vouching
[C]
Verification
[D]
Checking
(19)
How long is the auditor’s term of office?
[A]
Until the audit is complete
[B]
Until the financial statements are complete
[C]
Until the next AGM (Annual General Meeting)
[D]
Until the directors remove them
Answer: Until the next AGM (Annual General Meeting)
(20)
Which of the following is correct in relation to materiality?
[A]
A matter is material only if it changes the audit report
[B]
A matter is material if the auditor and the directors both decide that further work needs to be done in the area under question
[C]
A matter is material only if it affects directors’ emoluments
[D]
A matter is material if its omission or misstatement would reasonably influence the decisions of an addressee of the auditors’ report
Answer: A matter is material if its omission or misstatement would reasonably influence the decisions of an addressee of the auditors’ report