Auditing - Practice Test | ExamPrepSheets

[#41] The existence of a good system of internal check reduces to a great extent

(A) the work of the auditor

(B) the liability of the auditor

(C) neither the work nor the liability of the auditor

(D) both the work and the liability of the auditor

Correct Answer

(A) the work of the auditor

[#42] The first Auditor of a company is appointed by the

(A) Board of Directors

(B) Shareholders

(C) Central Government

(D) Promoters Company

Correct Answer

(A) Board of Directors

[#43] Which of the following will not lead to creation of secret reserve?

(A) Undervaluation of closing stock

(B) Charging capital expenditure to revenue

(C) Goods sent on consignment being shown as actual sales

(D) Charging higher rates of depreciation on fixed assets than actually required

Correct Answer

(C) Goods sent on consignment being shown as actual sales

[#44] Which of the following statement is not true regard to auditor's attendance at stock taking?

(A) Auditor should attend physical stock taking only if inventory is material

(B) Auditor may not attend physical verification of stock by management, if he does not find it appropriate to rely on it

(C) If inventory is material, even when the auditor is not placing reliance on the physical verification by the management, he should attend it

(D) The primary objective of an auditor's observation of an entity's observation of an entity's stock take is to obtain direct knowledge that the stock and has been property counted

Correct Answer

(C) If inventory is material, even when the auditor is not placing reliance on the physical verification by the management, he should attend it

[#45] The scope of the audit including reference to the pronouncements of the ICAI, which the auditor adheres to, generally is communicated to the client in the . . . . . . . . (i) auditor's report (ii) engagement letter (iii) representation letter

(A) (i) only

(B) Both (i) and (ii)

(C) Both (i) and (iii)

(D) All of the above

Correct Answer

(B) Both (i) and (ii)

Auditing - Study Mode

[#41] The existence of a good system of internal check reduces to a great extent

Correct Answer

[#42] The first Auditor of a company is appointed by the

Correct Answer

[#43] Which of the following will not lead to creation of secret reserve?

Correct Answer

[#44] Which of the following statement is not true regard to auditor's attendance at stock taking?

Correct Answer

[#45] The scope of the audit including reference to the pronouncements of the ICAI, which the auditor adheres to, generally is communicated to the client in the . . . . . . . . (i) auditor's report (ii) engagement letter (iii) representation letter

Correct Answer