Auditing mcqs with answers for senior auditor mcqs, NTS, FPSC, PPSC and SPSC

Here a list of Audit mcqs and Auditing MCQs with answers for preparation of posts like Senior Auditor, Junior Auditor, Accountant and Internal and External Auditors. 

These MCQs are very helpful in the Senior Auditor Mcqs test conducted by Federal Public Service Commission (FPSC).

Multiple Choice Questions (MCQs)

1. Auditing begins where________________ends.

(a) Marketing

(b) Selling

(c) Inventory Management

(d) Accounting

View Answer

(d) Accounting

2. Audit of joint-stock companies is conducted in order to_________________.

(a) Increase the Profits

(b) Meet the statutory requirements

(c) Satisfy the shareholders

(d) Increase the goodwill

View Answer

(b) Meet the statutory requirements 

3. Audit is compulsory in the case of_________________________.

(a) Charitable Trusts

(b) Joint Stock Companies

(c) Banking Companies

(d) All of the Above

View Answer

(d) All of the Above

4. Auditing can be defined as________________.

(a) Preparation of books of accounts

(b) Examination of books accounts

(c) Rendering expert advice to management regarding accounting matters 

(d) All of the Above

View Answer

(b) Examination of books of accounts

5. The main objective of the audit of a joint stock company is____________________.

(a) Detection and prevention of errors

(b) Detection and prevention of frauds

(c) Detection and prevention of errors and frauds

(d) to find out whether the balance sheet and income statement are properly drawn as per                companies ordinance and represent a fair and true view of the state of affairs.

View Answer

(d) to find out whether the balance sheet and income statement are properly drawn as per companies ordinance and represent a fair and true view of the state of affairs.

6. The internal auditor of a joint stock company______________________________.

(a) Need not to possess the qualification laid down in the companies ordinance

(b) Should be a chartered accountant

(c) Should be a chartered accountant or a cost accountant

(d) Should hold some other professional qualifications

View Answer

(a) Need not to possess the qualification laid down in the companies ordinance 

7. An internal check is meant for________________.

(a) Detection of frauds

(b) Helping audit in depth

(c) Prevention of frauds

(d) All of the above

View Answer

(c) Prevention of frauds

8. Auditor of a partnership firm__________________.

(a) Need not to possess the qualification laid down in the companies ordinance

(b) Should be a chartered accountant

(c) Should be a chartered accountant or a cost accountant

(d) Should hold some other professional qualifications

View Answer

(a) Need not to possess the qualification laid down in the companies ordinance 

9. The internal auditor is appointed by____________________.

(a) The management

(b) The Shareholders

(c) The accountant

(d) The registrar of companies

View Answer

(a) The management

10. The purpose of internal audit is to________________________.

(a) Meet the statutory requirements

(b) Meet the needs of the management to conduct the business more efficiently

(c) Meet the needs of the shareholders

(d) All of the above

View Answer

(b) Meet the needs of the management to conduct the business more efficiently

11. Limitation of the audit is__________________.

(a) that it does reveal the complete picture

(b) that it does guarantee the accuracy of accounts

(c) that auditor may be biased

(d) All of the above

View Answer

(d) All of the above

12. The special audit is necessary for________________.

(a) manufacturing concerns

(b) processing concerns

(c) inefficient concerns

(d) trading concerns

View Answer

(c) Inefficient Concerns

13. A continuous audit is especially needed for_______________________.

(a) any trading concern

(b) banking companies

(c) smaller concerns

(d) any manufacturing concern

View Answer

(b) banking concern

14. An internal check is part of the whole system of__________________.

(a) Internal Audit

(b) Internal Control

(c) Annual Control

(d) Continuous Audit

View Answer

(b) Internal Control

15. Cost audit means_______________.

(a) Auditing the cost of goods produced

(b) Audit of the cost accounts

(c) Audit by a cost accountant

(d) All of the above

View Answer

(b) Audit of the cost accounts

16. A voucher is like________________________.

(a) A document in support of an entry made in the books of accounts

(b) The invoice received from a supplier

(c) Receipt issued to a customer for cash received

(d) All of the above

View Answer

(a) A document in support of an entry made in the books of accounts

17. The auditor shall inform the registrar of companies in writing about his acceptance of appointment within________________.

(a) 10 Days

(b) 20 Days

(c) 30 Days

(d) 45 Days

View Answer

(c) 30 Days

18. The company auditor has right to be________________.

(a) Re-appointed

(b) Consulated

(c) Indemnified

(d) All of the Above

View Answer

(c) Indemnified

19. Internal Audit is____________________.

(a) Statutory Audit

(b) Annual Audit

(c) Internal Control

(d) Half-yearly audit

View Answer

(c) Internal Control

20. Audit of a sole proprietorship is________________.

(a) Compulsory

(b) Advisable

(c) Unnecessary

(d) All of the above

View Answer

(c) Unnecessary

21. Audit techniques are concerned with the_____________________________.

(a) Examination of those evidence which have been traced by audit procedures

(b) Application of Generally accepted accounting principles to particular phases of a financial             statements

(c) Accuracy and validity of management authorization to the account section employees

(d) Method of conducting a business affair and reporting in annual report

View Answer

(a) Examination of those evidence which have been traced by audit procedures

22. Internal check refers to______________________________________.

(a) Checking of record by the cashier

(b) Checking of accounts by the internal auditor

(c) Checking of work of one person by another automatically

(d) Management control internally over the subordinates

View Answer

(c) Checking of work of one person by another person automatically

23. Vouching implies:

(a) Inspection of receipts

(b) Examination of vouchers to check the authenticity of records

(c) Surprise checking of accounting records

(d) Examining the various assets

View Answer

(b) Examination of vouchers to check the authenticity of records

24. Government audit means_________________.

(a) Auditing of the accounts of the government departments

(b) Audit under the provisions of law

(c) Auditing of companies by persons appointed by law

(d) All of the above

View Answer

(a) Auditing of the accounts of the government departments

25. The auditor of a company______________________.

(a) has a right to attend every general meeting of the company

(b) has the right to attend only annual general meetings of the company

(c) has the right to attend only those  annual general meetings in which the board of directors           decide to invite him

(d) has a right to attend only those meetings where accounts are being discussed 

View Answer

(a) has  a right to attend every general meeting of the company

26. An auditor is like a________________.

(a) Greedy dog

(b) Watchdog

(c) Thirst dog

(d) Mad dog

View Answer

(b) Watch dog

27. Internal audit is_________________.

(a) Annual Audit

(b) Statutory Audit

(c) Internal control

(d) Half-yearly audit

View Answer

(c) Internal control

28. Object of verification is________________.

(a) Checking value of assets

(b) Physical verification of assets

(c) Examining the authority of their acquisition

(d) All of these

View Answer

(d) All of these

29. The first auditor of the company is appointed by the_____________________.

(a) Federal Government

(b) Pakistan Stock Exchange

(c) Shareholders

(d) Board of directors

View Answer

(d) Board of directors

30. Auditor in his report gives his__________________.

(a) Judgement

(b) Guarantee of the correctness of his accounts

(c) Opinion

(d) All of these

View Answer

(c) Opinion

31. Depth tests are also known as__________________.

(a) Substantive Tests

(b) Cradle to Glave Tests

(c) Compliance Tests

(d) All of the Above

View Answer

(b) Cradle to Glave Tests

32. Working papers are property of__________________.

(a) Client

(b) Registrar

(c) Auditor

(d) Corporate law authority

View Answer

(c) Auditor

33. The chartered accountant act was passed in_____________________.

(a) 1948

(b) 1949

(c) 1950

(d) 1951

View Answer

(b) 1949

34. A vacancy created by the resignation of an auditor is filled by____________________________.

(a) The Managing Director 

(b) Board of Directors

(c) General Meeting

(d) Any of the Above

View Answer

(c) General Meeting

35. A company auditor can attend the general meeting of the company as a matter of_______________.

(a) Right

(b) Duty

(c) Both (a) and (b)

(d) He cannot attend the general meeting

View Answer

(a) Right

36. Who has the authority to remove the auditor of a company?

(a) The Managing Director

(b) Board of Directors

(c) General Meeting

(d) Any of the above

View Answer

(c) General Meeting

37. Balance Sheet audit is useful if the concern_______________________________.

(a) is weak in internal check

(b) has no internal check

(c) is a small one

(d) is a big one

View Answer

(d) is big one

38. Audit Notebook is a_____________________________.

(a) is a personal notebook of an auditor

(b) record of work performance by an auditor

(c) record of important points and enquiries which an auditor has to refer to his clients

(d) record of mistakes and errors detected during the course of audit of account books

View Answer

(c) record of important points and inquiries which an auditor has to refer to his clients 

39. Valuation of errors on wrong basis is_________________________.

(a) Technical error

(b) Error of Principle 

(c) Clerical error

(d) Compensating error

View Answer

(b) Error of Principle

40. Auditor is liable for______________________.

(a) Not verifying petty cash

(b) Not determining stock

(c) Not checking accounts properly

(d) All of the these

View Answer

(d) All of these

41. The purpose of internal audit is to______________________.

(a) meet the statutory requirements

(b) meet the needs of the management to conduct the business more efficiently

(c) meet the needs of the shareholders

(d) None of these 

View Answer

(b) meet the needs of the management to conduct the business more efficiently

42. Verification of assets involve:

(a) physical verification of assets

(b) verification of proper values of assets

(c) verifying that assets are free from any charge

(d) All of the Above

View Answer

(d) All of the Above

43. An internal check is meant for__________________.

(a) prevention of frauds

(b) detection of frauds

(c) helping audit in depth

(d) None of the above

View Answer

(a) prevention of frauds

44. Internal auditor can be removed by________________.

(a) The management or directors

(b) statutory auditor

(c) shareholders

(d) Government

View Answer

(a) The management or directors

45. Audit at the end of the year is known as________________.

(a) partial audit  

(b) standard audit

(c) efficiency audit

(d) operational audit

View Answer

(a) partial audit

46. Interim audit is conducted between two__________audits.

(a) continuous audits

(b) cost audit

(c) final audit

(d) all of these

View Answer

(c) final audit

47. Audit note book contains_________________.

(a) various dates for reference

(b) details of work done

(c) notes regarding items requiring clarifications

(d) all of these

View Answer

(d) all of these

48. Internal audit is helpful in_________________.

(a) audit in depth

(b) statutory audit

(c) internal check

(d) the prevention of errors and frauds

View Answer

(d) the prevention of errors and frauds

49. An auditor of a company gives_________________.

(a) his expert opinion about accounts

(b) a critical review of accounts

(c) factual position or about the accounts

(d) None of the above

View Answer

(a) his expert opinion about accounts

50. Which type of audit is more suitable where there is no satisfactory system of internal check:

(a) continuous audit

(b) periodical audit

(c) balance sheet audit

(d) None of the above

View Answer

(a) continuous audit

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