FPSC PPSC AUDITING & ACCOUNTS Top 500 + MCQS Download Pdf Second Half

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

A. internal control

B. internal check

C. internal audit

D. interim audit

52. The owners of the company are called

A. debenture holders

B. debtors

C. equity shareholders

D. creditors

53. Verification is

A. the art of recording the business transaction

B. an examination of the books of accounts

C. the act of establishing the accuracy of entries in the books of accounts

D. authorizing books of accounts

54. Depreciation is

A. the decrease in the value of an asset

B. the increase in the value of an asset

C. an appreciation to the company

D. a credit to shareholders

55. The main objects of investigation is

A. to discover errors and frauds

B. to prevent errors and frauds

C. to verify statements

D. all the above

56. Internal controls and internal check are

A. one and the same

B. different

C. internal control includes internal check

D. both are not related

57. Share may be issued

A. at par

B. at premium

C. at discount

D. all the above

58. Special audit is necessary for

A. inefficient concern

B. processing concern

C. trading concern

D. manufacturing concern

59. The first auditors appointed by the head office.

A. for a period of one year

B. for a period of two years

C. for a period of three years

D. till the conclusion of the first annual general meeting

60. Audit of Joint stock company account is

A. compulsory

B. unnecessary

C. avoidable

D. depends upon directors

61. The company’s auditor is expected to give.

A. his expert opinion about the accounts

B. a factual position about the accounts

C. a critical review of the accounts

D. financial assistance

62. Auditors of a joint stock company are appointed by.

A. directors of the company

B. annual general meeting

C. election at the annual general meeting

D. debenture holders

63. A company auditor can be removed by

A. board of directors

B. managing director

C. any director

D. general meeting

64. A vacancy caused by resignation of an auditor is filled by

A. board of directors

B. managing director

C. general meeting

D. central government

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

A. voluntary

B. compulsory

C. avoidable

D. advisable

66. Duties of a company auditor are defined by _

A. memorandum of Association

B. articles of Association

C. Companies Act 1956

D. agreement between company and the auditor

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

A. the central government appoints a person to fill the vacancy

B. the board of directors appoints a person to fill the vacancy

C. the board of directors appoints a person to fill the vacancy

D. none of these can appoint a person to fill the vacancy

68. Audit in depth means

A. audit of each and every item

B. intensive audit of each and every item

C. intensive audit of a few items

D. audit of a few selected items

69. When a company engages a Chartered Accountant as its internal auditor, the external auditor

A. need not check the areas covered by internal audit

B. should ignore the existence of internal audit

C. should incorporate the internal auditor’s report with his own

D. should examine the system and efficiency of internal audit and devise a suitable audit programme

70. Which of the following factors are likely to be identified as a fraud factor by the auditor?

A. The company is planning a initial public offer of quality shares to raise additional capital for expansion

B. Bank reconciliation statement includes deposits-in-transit

C. Plant and machinery is sold at a loss

D. The company has made political contributions

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

A. related party purchases

B. related party sales

C. the restatement of sales

D. omission of a sales transaction from being recorded

72. The audit engagement letter, generally, should include a reference to each of the following except

A. limitations of auditing

B. responsibilities of management with respect to audit work

C. expectation of receiving a written management representation letter

D. a description of the auditor’s method of sample selection

73. The least impot element in the evaluation of an audit firm’s system of quality control would relate to

A. assignment of audit assistants

B. assignment of audit assistants

C. consultation with experts

D. confidentiality of clients information

74. Audit of banks is an example of

A. statutory audit

B. balance sheet audit

C. concurrent audit

D. all of the above

75. Concurrent audit is a part of

A. internal check system

B. continuous audit

C. internal audit system

D. final audit

76. balance sheet audit is synonymous to

A. annual audit

B. continuous audit

C. detailed audit

D. statutory audit

77. Which of the following statements is not true about continuous audit?

A. It is conducted at regular interval

B. It may be carried out on daily basis

C. It is needed when the organization has a good internal control system

D. It is expensive

78. Of the following, which is the least persuasive type of audit evidence?

A. Bank statements obtained from the client

B. Documents obtained by auditor from third parties directly

C. Documents obtained by auditor from third parties directly

D. Computations made by the auditor

79. Which of the following statements is generally correct about the reliability of audit evidence?

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

B. Effective internal control system provides reliable audit evidence

C. Evidence obtained from outside sources routed through the client

D. Information collected within in organization can be accepted

80. Audit Programme is prepared by.

A. the auditor

B. the client

C. the audit assistants

D. the auditor and his audit assistants

81. The working papers which auditor prepares for financial statements audit are

A. evidence for audit conclusions

B. owned by the client

C. owned by the auditor

D. retained in auditor’s office until a change in auditors

82. The quantity of audit working papers compiled on engagement would most be affected by

A. management’s integrity

B. auditor’s experience and professional judgment

C. auditor’s qualification

D. control risk

83. The auditor’s permanent working paper file should not normally include.

A. extracts from clients bank statements

B. last year’s financial statements

C. attorney’s letters

D. debt agreements.

84. Who is responsible for the appointment of statutory auditor of a limited company?

A. Directors of the company

B. Members of the company

C. The central government

D. The state government

85. The board of directors shall appoint first auditor of a company

A. within one month of completion of capital subscription state of the company

B. within one month of the promotion of the company

C. within one month of the commencement of the business of the company

D. within one month of incorporation of the company

86. In case the directions fail to appoint first auditors, the shareholders shall appoint them by passing a resolution.

A. a general meeting

B. first annual general meeting

C. statutory meeting

D. annual general meeting

87.The authority to remove the first auditor before the expiry of term is with

A. the shareholders in a general meeting

B. the shareholders in the first annual general meeting

C. the board of directors

D. the central government

88. A statutory auditor has a right of access at all times to

A. books and accounts of a company

B. books, account and documents of the company

C. books, accounts and vouchers of the company

D. notices and documents of the company

89. Auditor of a _ company does not have the right to visit foreign branches of the company.

A. unlimited liability

B. manufacturing

C. banking

D. non-profit making

90. General Controls will be ineffective when EDP Department

A. participates in computer software acquisition decisions

B. design documentations for computerized operations

C. originate changes in master files

D. provide physical security for programme files

91. Which of the following activities would most likely be performed by the EDP department?

A. Authorizing transactions

B. Parity checks

C. Distributing output

D. Correction of transaction errors

92. Which of the following documents is not relevant for vouching cash sales?

A. Daily cash summary

B. A salesman’s summary

C. Monthly statements sent to customers

D. Bank statement

93. To test whether sales have been recorded, the auditor should draw a sample from a file

A. purchase orders

B. sales orders

C. sales invoices

D. bill of lading

94. The Guidance Note on Revenue’ issued by the ICAI does not deal with_

A. sales revenue

B. revenue rendering service

C. revenue from sale of fixed assets

D. income from interest, dividend etc

95. Which of the following would prevent double payment of the same voucher?

A. The person signing the cheque should cancel the supporting documents

B. Cheques should be signed by at best two persons

C. The data of payment of vouchers of similar nature should be the same or close to each


D. Cheques should not be signed by any one person

96. In case of unclaimed wages, 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. held with the company accountant

97. While vouching wages, the auditor should examine whether there is proper segregation of duties. Which of the following activities should not be done by the same department?

A. Maintaining personnel records and approving changing in wages rates

B. Proposing payroll summary and disbursement of wages

C. Making salary statements and filing returns

D. Comparing time clock records with the time reports prepared by the supervisor

98. In order to vouch, which of the expenses, the auditor will examine Bill of entry?

A. Custom

B. Excise duties

C. Sales tax

D. Income tax

99. 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

100. 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