Auditing - Questions and Answers for Competitive Exams | GkSeries

25. The work of one clerk is automatically check by another clerk is called _________.

1. [A] Internal control.
2. [B] Internal check.
3. [C] Internal audit.
4. [D] None of the above.

Answer: Option [B]

26. The owners of the company are called __________.

1. [A] Debenture holders.
2. [B] Debtors
3. [C] Shareholders
4. [D] None of the above.

Answer: Option [C]

27. The main objects of investigation is _________.

1. [A] to discover errors and frauds.
2. [B] to prevent errors and frauds.
3. [C] to verify statements.
4. [D] all the above

Answer: Option [D]

28. Share may be issued _____________.

1. [A] at par.
2. [B] at premium.
3. [C] at discount.
4. [D] all the above.

Answer: Option [D]

29. The liabilities of an auditor can be _________.

1. [A] Civil
2. [B] Criminal
3. [C] Civil and Criminal.
4. [D] Official

Answer: Option [C]

30. Internal auditor of a company must be _______________.

1. [A] Cost accountant.
2. [B] Chartered accountant.
3. [C] ICWA
4. [D] need not possess any professional qualification.

Answer: Option [B]

31. A vacancy caused by resignation of an auditor is filled by _________.

1. [A] board of directors.
2. [B] managing director.
3. [C] general meeting.
4. [D] central government.

Answer: Option [C]

32. Cost audit under section 233(b) of the companies act is ___________.

1. [A] voluntary
2. [B] compulsory
3. [C] advisable
4. [D] avoidable

Answer: Option [C]

33. When at an annual general meeting of a company no auditor is appointed or reappointed. In that case ________

1. [A] the central government appoints a person to fill the vacancy
2. [B] the board of directors appoints a person to fill the vacancy.
3. [C] the managing director of the company appoints a person to fill the vacancy.
4. [D] none of these can appoint a person to fill the vacancy.

Answer: Option [A]

34. The most difficult type of misstatement to detect fraud is based on __________.

1. [A] related party purchases.
2. [B] related party sales.
3. [C] the restatement of sales.
4. [D] omission of a sales transaction from being recorded.

Answer: Option [D]

35. Professional skepticism requires that the auditor assume that management is _________.

1. [A] reasonably honest.
2. [B] neither honest nor dishonest.
3. [C] not necessarily honest.
4. [D] dishonest unless proved otherwise.

Answer: Option [B]

36. The use of an audit engagement letter is the best method of assuring the auditor will have which of the following?

1. [A] Auditor will obtain sufficient appropriate audit evidence.
2. [B] Management representation letter.
3. [C] Access to all books, accounts and vouchers required for audit purpose.
4. [D] Co-operation from other auditors

Answer: Option [C]