Auditing MCQs with Answers

This is Auditing MCQs section with detailed explanations for preparation of screening tests, interviews for government jobs. In this section candidate will learn MCQs on variety of topics from the subject.

1. 91 The basic assumption underlying the use of analytical procedures is:____________
   

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

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

   3. Analytical procedures will not be able to detect unusual relationships

   4. None of the above.

   See Answer

   Added By: Ak Aamir

   Answer

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

   Explanation

   :
   N/A

2. 92 What are analytical procedures
   

   1. Substantive tests designed to assess control risk

   2. Substantive tests designed to evaluate the validity of managements representation letter

   3. Substantive tests designed to study relationships between financial and nonfinancial

   4. All of the above

   See Answer

   Added By: Ak Aamir

   Answer

   : Substantive tests designed to study relationships between financial and nonfinancial

   Explanation

   :
   N/A

3. 93 Which of the following is not an analytical procedure
   

   1. Tracing of purchases recurred in the purchase book to purchase invoices.

   2. Comparing aggregate wages paid to number of employees

   3. Comparing the actual costs with standard costs

   4. All of them are analytical procedure

   See Answer

   Added By: Ak Aamir

   Answer

   : Tracing of purchases recurred in the purchase book to purchase invoices.

   Explanation

   :
   N/A

4. 94 When applying analytical procedures, an auditor could develop independent estimate of an account balance to compare it to___________
   

   1. clients unedited account balance

   2. clients unedited account balance adjusted for trends in the industry

   3. Prior year audited balance

   4. Prior year audited balance adjusted for trends in the industry

   See Answer

   Added By: Ak Aamir

   Answer

   : Prior year audited balance adjusted for trends in the industry

   Explanation

   :
   N/A

5. 95 What is the primary objective of analytical procedures used in the overall review stage of an audit
   

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

   2. To reduce specific detection risk

   3. To direct attention to potential risk areas

   4. To satisfy doubts when questions arise about a clients ability to continue

   See Answer

   Added By: Ak Aamir

   Answer

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

   Explanation

   :
   N/A

6. 96 Of the following, which is the least persuasive type of audit evidence
   

   1. Bank statements obtained from the client

   2. Documents obtained by auditor from third parties directly.

   3. Carbon copies of sales invoices inspected by the auditor

   4. Computations made by the auditor

   See Answer

   Added By: Ak Aamir

   Answer

   : Carbon copies of sales invoices inspected by the auditor

   Explanation

   :
   N/A

7. 97 In an audit of financial statements, substantive tests are audit procedures that___________
   

   1. may be eliminated for an account balance under certain conditions

   2. are designed to discover significant subsequent events

   3. will increase proportionately when the auditor decreases the assessed level of control risk

   4. may be test of transactions, test of balance and analytical procedures

   See Answer

   Added By: Ak Aamir

   Answer

   : may be test of transactions, test of balance and analytical procedures

   Explanation

   :
   N/A

8. 98 The nature, timing and extent of substantive procedures is _________ related to assessed level of control risk
   

   1. randomly

   2. disproportionately

   3. directly

   4. inversely

   See Answer

   Added By: Ak Aamir

   Answer

   : directly

   Explanation

   :
   N/A

9. 99 Which of the following statements is, generally, correct about the reliability of auditevidence
   

   1. To be reliable, evidence should conclusive rather than persuasive

   2. Effective internal control system provides reliable audit evidence

   3. Evidence obtained from outside sources routed through the client

   4. All are correct.

   See Answer

   Added By: Ak Aamir

   Answer

   : Effective internal control system provides reliable audit evidence

   Explanation

   :
   N/A

10. 100 When is evidential matter, generally, considered sufficient
    

    1. When it constitutes entire population

    2. When it is enough to provide a basis for giving reasonable assurance regarding truthfulness

    3. When it is objective and relevant

    4. When auditor collects and evaluates it independently

    See Answer

    Added By: Ak Aamir

    Answer

    : When it is enough to provide a basis for giving reasonable assurance regarding truthfulness

    Explanation

    :
    N/A