Auditing MCQs with Answers – Practice Online – Page 8

Question 141 Capital And Revenue Expenditure

Which of these expenses should NOT be treated as capital expenditure?

Correct answer A. Legal expenses incurred to defend a suit related to title of patent.

Open question

Question 142 Capital And Revenue Expenditure

When must the board of directors appoint a company’s first auditor?

Correct answer A. Within one month of incorporation of the company

Open question

Question 143 Capital And Revenue Expenditure

If the directors fail to appoint the first auditor(s), at what meeting do the shareholders appoint them by passing a resolution?

Correct answer C. A general meeting

Open question

Question 144 Audit Evidence

Which of the following is the least persuasive type of audit evidence?

Correct answer D. Carbon copies of sales invoices inspected by the auditor

Open question

Question 145 Audit Evidence

In an audit of financial statements, what are substantive tests?

Correct answer B. They may be tests of transactions, tests of balances and analytical procedures

Open question

Question 146 Audit Evidence

How are the nature, timing and extent of substantive procedures related to the assessed level of control risk?

Correct answer C. Directly

Open question

Question 147 Audit Evidence

Which statement about the reliability of audit evidence is generally correct?

Correct answer D. Effective internal control system provides reliable audit evidence

Open question

Question 148 Audit Evidence

When is audit evidence generally considered sufficient?

Correct answer C. When it is enough to provide a basis for giving reasonable assurance regarding truthfulness

Open question

Question 149 Audit Evidence

Which of the following is NOT corroborative evidence?

Correct answer B. Worksheet supporting consolidated financial statements

Open question

Question 150 Audit Evidence

Which of the following affect audit effectiveness?

Correct answer D. Both A and C

Open question

Question 151 Audit Evidence

Which statement about management representations obtained under AAS 11 is NOT true?

Correct answer D. It should always be in writing

Open question

Question 152 Audit Evidence

In substantive testing, what best describes the risk of incorrect rejection?

Correct answer C. The auditor concludes a balance is materially misstated when in fact it is not

Open question

Question 153 Audit Evidence

In substantive audit testing, what best describes the risk of incorrect acceptance?

Correct answer C. The auditor has ascertained that the balance is materially correct when in actual fact it is not

Open question

Question 154 Audit Evidence

Which factor is most important in deciding whether audit evidence is appropriate?

Correct answer A. The reliability of audit evidence and its relevance in meeting the audit objective

Open question