Top 250+ Solved Auditing MCQ Questions Answer
Q. In case of unclaimed wages, the auditor should examine whether
a. The amount has been deposited in a separate bank account
b. Deposited with the cashier
c. Held in a safe deposit box
d. All of these
Q. While vouching wages, auditor should examine whether there is proper segregation of duties. Which of the following activities should not be done by same department?
a. Maintaining personnel records and approving changing in wages rates
b. Proposing pay roll summary and disbursement of wages
c. Making salary statements and filing tax returns
d. Comparing time clock records with time reports prepared by supervisors and preparing list of workers employed along with the units of production for each one of them
Q. In order to vouch, which of the expenses, the auditor will examine Bill ofEntry?
a. Custom
b. Excise duties
c. Sales tax
d. Income tax
Q. While vouching, how will the auditor ensure himself that all credit salestransactions have been recorded by the entity?
a. Examining cut-off points
b. Matching entries in the sales book against renumbered sales invoices and goods outward notes
c. Counting the number of invoices and matching the number with entries on sales book
d. Both (a) and (b)
Q. In case of sales return, the auditor should examine which documents?
a. Credit notes, advice notes and inward return notes
b. Debit notes, advice notes and inward return notes
c. Purchase invoices, advice notes and inward return notes
d. Credit notes, inspection report and inward return notes
Q. An internal auditor discovered that fictitious purchases have been recorded bythe purchase clerk. This indicates absence of which control?
a. Purchase invoices are independently matched with purchase orders and goods received notes
b. Goods received notes requires the signature of individual who authorized the purchase
c. Routine checks are performed by internal auditor fortnightly.
d. Purchase function and production function are clubbed in one department
Q. Which of the following is most crucial to a purchase department?
a. Reducing the cost of acquisition
b. Selecting supplies
c. Authorizing the acquisition of goods
d. Assuring the quality of goods
Q. The auditor is most likely to examine related party transactions very carefullywhile vouching
a. Credit sales
b. Sales returns
c. Credit purchases
d. Cash purchases
Q. In order to vouch bought ledger, the auditor obtain confirmations from creditors. The principal reason for the auditor to examine suppliers statements at balance sheet date is to obtain evidence that
a. The supplier exist
b. There are no unrecorded liabilities
c. Recorded purchases actually occurred
d. To link creditors with cash book entries
Q. The creditor’s accounts, generally, have credit balance. Debit balance may be due to
a. Advance paid against an order
b. Goods returned
c. Wrong debit to supplier account
d. Any of these
Q. In case of vouching, the auditor is least likely to examine authorization byappropriate authority in case of –
a. Bad debts written off
b. Sales return
c. Purchase return
d. Discount allowed to customers as per organizational policy
Q. Vendors should be approved by Management before purchase departmentexecutes an order. If this is not done, then which of the following situations may arise?
a. Purchases could be made from vendors whose product quality may not be good
b. Purchases may be made from related parties without management’s knowledge
c. Purchases could be made from vendors who may have offered price to manager purchases
d. Any of these
Q. Which of the following is not true with regard to verification of assets?
a. It invoices substantiation of occurrence of transactions
b. Its objective is to establish existence, ownership, possession, valuation and disclosure of assets
c. The auditor has to form an opinion on different aspects
d. All are true
Q. Which of the following statements is not true?
a. Valuation of assets is the responsibility of management
b. The auditor can rely on a certificate issued by an authorized valuationer as to the valuation of assets in the balance sheet
c. The auditor should value the asset as per generally accepted accounting principle
d. Valuation is no part of auditor’s duty
Q. An auditor is verifying valuation of building which has been self constructed bythe client. Which of the following documents is least relevant to the auditor for verification purposes?
a. Bills of contractor
b. Minutes of meeting of board of directors
c. Certificates of engineer and architect
d. Loan agreement