This quiz works best with JavaScript enabled. Home > Finance > Accounting > Auditing > Auditing – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Auditing Quiz 1 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Any of the following is not a reasonable condition that would support the need for an independent audit of the financial statements: A) Conflict of interest between management and the CPA. B) Complexity of financial reports. C) Remoteness of users of financial statements from accounting records. D) Consequences of financial statements in the user decision process. Show Answer Correct Answer: A) Conflict of interest between management and the CPA. 2. Which of the following is the correct flow of audit process? A) Understand the entity, planning, tests of control, preliminary engagement, establish materiality, evaluate results, complete the audit. B) Preliminary engagement, understanding the entity, establish materiality, planning, test of control, complete the audit, evaluate results. C) Understand the entity, preliminary engagement, planning, establish materiality, tests of control, evaluate results, complete the audit. D) Preliminary engagement, planning, establish materialitiy, tests of control, evaluate results, complete the audit. Show Answer Correct Answer: B) Preliminary engagement, understanding the entity, establish materiality, planning, test of control, complete the audit, evaluate results. 3. An audit programme is a set of ..... which are to be followed for proper execution of audit. A) Rules. B) Policies. C) Instructions. D) None of above. Show Answer Correct Answer: C) Instructions. 4. Transactions related to/related to fixed assets (which ones have normal balances in credit) A) Acquisition, Withdrawal of capital. B) Accumulated Depreciation of fixed assets, sales. C) Termination of use, Sales. D) Revaluation, Exchange. Show Answer Correct Answer: B) Accumulated Depreciation of fixed assets, sales. 5. Chartered Accountants Act was passed in the year A) 1949. B) 1939. C) 1956. D) 1959. Show Answer Correct Answer: A) 1949. 6. Independence in carrying out audits includes: A) Independence in creating audit programs. B) Independence in investigations. C) Independence in reporting. D) All True. Show Answer Correct Answer: D) All True. 7. External audit will be responsible for: A) Manajer accounting. B) Tax Manager. C) Shareholders. D) Board of Directors. Show Answer Correct Answer: C) Shareholders. 8. Examination of client documents and records to support information that should be recorded in financial statements is the definition of..... A) Investigation. B) Observation. C) Confirmation. D) Inspection. Show Answer Correct Answer: D) Inspection. 9. Fraud in financial statements can involve actions such as those presented below. TRUE is..... A) The correctness of the deliberate application of accounting principles relating to amounts, classification, method of presentation or disclosure. B) Manipulation, falsification, or alteration of accounting records or supporting documents that become data sources for other companies. C) Correct representation or omission in financial statements of significant events, transactions or information. D) Manipulation, falsification, or changes in accounting records or supporting documents which are data sources for the presentation of financial reports. Show Answer Correct Answer: D) Manipulation, falsification, or changes in accounting records or supporting documents which are data sources for the presentation of financial reports. 10. The following are the objectives of an audit except..... A) Accounting data can be trusted. B) Maintaining Security of Company Assets. C) Securing Operational Costs. D) Running operational activities effectively and efficiently. Show Answer Correct Answer: C) Securing Operational Costs. 11. Auditing is luxury for A) Joint stock company. B) Partnership. C) Small shop keepers. D) Government company. Show Answer Correct Answer: C) Small shop keepers. 12. The following is a person disqualified from becoming an auditor of a company except A) He owes the company a sum of RM28, 000. B) Has been convicted of any offense involving fraud or dishonesty. C) He is an undischarged bankrupt. D) He was an officer of the company in the past 2 years prior the appointment. Show Answer Correct Answer: D) He was an officer of the company in the past 2 years prior the appointment. 13. Which of the following factors is most important in determining the appropriations of auditevidence? A) The reliability of audit evidence and its relevance in meeting the audit objective. B) The objectivity and integrity of the auditor. C) The quantity of audit evidence. D) The independence of the source of evidence. Show Answer Correct Answer: A) The reliability of audit evidence and its relevance in meeting the audit objective. 14. Which are not included in the classification of management assertions are: A) Existence and occurrence. B) Equipment. C) Rights and obligations. D) Effectiveness of performance measurement systems. Show Answer Correct Answer: D) Effectiveness of performance measurement systems. 15. In carrying out the audit and preparing the report, the auditor is obliged to use his professional skills carefully and thoroughly, which is one of the statements in the standard..... A) C. Reporting. B) D. Attestation. C) The. One one. D) B. Field work. Show Answer Correct Answer: C) The. One one. 16. What are the causes of information risk? A) The big gap between the users and supplier of information andadjustment of information which may benefit the supplier. B) The great volume of information. C) The increased complexity of information and economic activities. D) Incorrect treatment of information. E) All of above answers. Show Answer Correct Answer: E) All of above answers. 17. By observing, testing and assessing, an auditor examines the system of A) Statutory Audit. B) Internal Control. C) Continuous Audit. D) Internal Audit. Show Answer Correct Answer: B) Internal Control. 18. What are the types of audits? A) Information audit, financial report audit, management audit, internal control system audit. B) Operational audit, compliance audit, financial report audit, internal control system audit. C) Compliance audit, operational audit, financial report audit, management audit. D) Operational audits, private company audits, public company audits, financial report audits. Show Answer Correct Answer: B) Operational audit, compliance audit, financial report audit, internal control system audit. 19. The term "Audire" literally means A) . to hear. B) To check. C) To inform. D) To prevent. Show Answer Correct Answer: A) . to hear. 20. An audit enables an independent Certified Public Accountant to issue what is referred to as "an option" . A) True. B) False. Show Answer Correct Answer: B) False. 21. Auditors provide confidence to users of financial statements that the financial statements are free from material misstatement through..... A) Audit materiality. B) Audit opinion. C) Audit risk avoidance. D) None of above. Show Answer Correct Answer: A) Audit materiality. 22. Can the Recordress receive and deposit funds of the Court on a regular basis due to the absence of the Treasurer? A) No. B) Yes. Show Answer Correct Answer: A) No. 23. The following information is not included in the audit engagement letter between those concerned with the audit work on historical financial statements..... A) Audit time schedule. B) A statement that the audit to be carried out by the auditor is based on auditing standards. C) Statement of the names of parties who have a special relationship with the client. D) The client's ability to assist in gathering information to enable the auditor to provide an opinion on the audited financial statements. Show Answer Correct Answer: C) Statement of the names of parties who have a special relationship with the client. 24. Main Object of auditing is to A) Detect Errors. B) Prevent errors. C) Detect and Prevent errors. D) None of these. Show Answer Correct Answer: C) Detect and Prevent errors. 25. Audit note book is maintained by audit staff to note A) Errors. B) Queries. C) Any difficulty. D) All of these. Show Answer Correct Answer: D) All of these. 26. A number of checks and controls exercised in a business to ensure its efficient working is known as ..... A) Internal check. B) Internal control. C) Internal audit. D) None of above. Show Answer Correct Answer: B) Internal control. 27. Testing of internal control is carried out at the audit stage, namely; A) Planning. B) Reporting. C) Implementation. D) Pre Planning. Show Answer Correct Answer: A) Planning. 28. Who normally appoints the external auditors of a company? A) Directors. B) Senior management. C) Audit committee. D) Shareholders. Show Answer Correct Answer: D) Shareholders. 29. General Standards include all of the following except ..... A) Understanding the Entity. B) Independence. C) Adequate Training. D) Due Professional Care. Show Answer Correct Answer: A) Understanding the Entity. 30. Which of the followings are not the power or rights of auditors in S174(4-9)? A) A right to make oral representation when company propose to dismiss him as an auditor. B) A right to attend any general meetings that concerns him as an auditor. C) A right to information and explanation he considers necessary. D) A right to access at all times to the books and records. Show Answer Correct Answer: A) A right to make oral representation when company propose to dismiss him as an auditor. 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