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Auditing Test Questions

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Auditing Test Questions

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1. Test Checking refers to

Checking of selected number of transactionsTesting of accounts and recordsChecking of all transactions recordedExamination of adjusting and closing entries

2. Which of the following statement best describes the understanding with respect to ownership and custody of working papers prepared by an auditor?

Successor auditors may have access to working papers of the predecessor auditors. The approval of client is not required.The safe custody of working papers is the responsibility of client, if kept at his premisesThe working papers may be obtained by third parties when they appear to be relevant to issues raised in litigationThe working papers must be retained by an audit firm for a period of 10 years

3. When is evidential matter, generally, considered sufficient?

When auditor collects and evaluates it independentlyWhen it is enough to provide a basis for giving reasonable assurance regarding truthfulnessWhen it constitutes entire populationWhen it is objective and relevant

4. An auditor should study and evaluate internal controls to

Plan audit proceduresDetermine whether assets are safeguardedExpress and opinionSuggest improvements in internal control

5. Which of the following is not corroborative evidence?

Information gathered by auditor through observationMinutes of meetingsWorksheet supporting consolidated financial statementsConfirmations from debtors

6. Receipts from sale of investments should be vouched with the help of

Brokers Sold notesBrokers bought notesMinutes bookInventory of investment

7. While verifying intangible assets, an auditor would recomputed amortization charges and determines whether amortization period is reasonable. The auditor tries to establish ….by doing it

PossessionValuationExistenceDisclosure

8. Which of the following affects audit effectiveness?

Risk of over relianceRisk of incorrect rejectionRisk of incorrect acceptanceBoth (b) and (c)

9. Which of the following is not true regarding requirements under section 227(3) (f) of the Companies Act, 1956?

The disqualification should be considered on the date of audit report.The auditor requires every director to submit a written representation in respect of each Public company, of which the is a director, as to whether such company has defaulted in terms of provisions of sections 274(1) (g)Section 274(1) (g) is applicable to appointment of directors both in public and private companies but reporting is limited to only those directors of a company who are also directors of a public companyThe auditor has to satisfy himself whether any of the directors of the company, whether public or private, are disqualified from being appointed as directors as per section 274(1) (g).

10. The inventory consists of about one per cent of all assets. The client has imposed restriction on auditor to prohibit observation of stock take. The auditor cannot apply alternate audit procedures.

Unqualified opinionAdverse opinionQualified opinionDisclaimer of opinion

11. Which of the following is most crucial to a purchase department?

Assuring the quality of goodsAuthorizing the acquisition of goodsSelecting suppliesReducing the cost of acquisition

12. As per the requirements of section 226(3) and 226(4) a person is disqualified from being appointed as a statutory auditor if he holds

Shares carrying voting rights of the companyEquity shares carrying voting of the companySecurity carrying voting rights of the companyEquity shares or debentures of the company

13. An auditor is verifying valuation of building which has been self constructed by the client. Which of the following documents is least relevant to the auditor for verification purposes?

Loan agreementMinutes of meeting of board of directorsCertificates of engineer and architectBills of contractor

14. The branch auditor is appointed by –

Shareholders in an annual general meetingAny of the aboveBoard of directors in board meetingShareholders in general meeting

15. In case of vouching, the auditor is least likely to examine authorization by appropriate authority in case of –

Discount allowed to customers as per organizational policySales returnBad debts written offPurchase return

16. The auditor has serious concern about the going concern of the company. It is dependent on company’s obtaining a working capital loan from a bank which has been applied for. Then management of the company has made full disclosure of these facts in the notes to the balance sheet. The auditor is satisfied with the level of disclosure. He should issue_

Unqualified opinion with reference to notes to the accountsQualified opinionDisclaimer of opinionUnqualified opinion

17. When auditing prepaid insurance, an auditor discovers that the insurance policy bond on building is not available for inspection. This may indicate__

Insurance premium paid but not recordedLien on buildingNo insurance has been undertaken for buildingInsurance premium has not been paid

18. An internal auditor discovered that fictitious purchases have been recorded by the purchase clerk. This indicates absence of which control?

Goods received notes requires the signature of individual who authorized the purchaseRoutine checks are performed by internal auditor fortnightly.Purchase function and production function are clubbed in one departmentPurchase invoices are independently matched with purchase orders and goods received notes

19. Which of the following expenses should not be treated as capital expenditure?

The fees paid to engineer who constructed the plant.Legal expenses incurred to defend a suit related to title of patent. The suit has been lostCost of dismantling a building in case a new building is to be constructed on the landExpenses paid on installation of a plant.

20. The performance of tests of control is documented in

Flow chartsWorking papersAudit programmeAny of the above

21. Payment for wage should be vouched with the help of

Piece Work Statement.Bank pass book.Minutes bookWage sheets

22. Which of the following statements is not true?

Valuation is no part of auditor’s dutyThe auditor can rely on a certificate issued by an authorized valuationer as to the valuation of assets in the balance sheetValuation of assets is the responsibility of managementThe auditor should value the asset as per generally accepted accounting principle

23. The date on auditor’s report should not be__

Earlier than the date on which the accounts are approved by the managementLater than the date on which the accounts are approved in board’s meetingBoth (a) and (b)The data of AGM

24. The authority to remove the first auditor before the expiry of term is with_

the Central GovernmentThe shareholders in a general meetingThe shareholders in the first annual General meetingThe board of directors

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

Computations made by the auditorBank statements obtained from the clientCarbon copies of sales invoices inspected by the auditorDocuments obtained by auditor from third parties directly.

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All trademarks, logos and brand names are the property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, trademarks and brands does not imply endorsement.

About | Explore | User Guide | Topics | Subjects | Doubt Solver | Career Aptitude Test | Answers | Free Tools | OSHA Basics Quiz | What Should We Know?
Privacy | Terms |

Without work one finishes nothing. - Ralph Waldo Emerson
© 2026 Fatskills.com