Introduction to Auditing MCQsMutliple Choice Questions and Answers
In this page, you will get Introduction to Auditing MCQs which are useful for B. Com and Various Professional Exams Like CA/CMA and CS.
We update this page frequently to add new questions. Chapter wise Auditing MCQs are also included in this post.
Introduction to Auditing
The word audit is derived from the Latin word “AUDIRE” which means to hear. Initially auditor was a person appointed by the owners to check account whenever the suspected fraud, he was to hear explanation given by the person responsible for financial transactions. Emergence of joint stock companies changed the approach of auditing as ownership was pestered from management. The emphasis now is clearly on the verification of accounting date with a view on the reliability of accounting statement.
Auditing is a systematic examination of the books and records of a business or other organization, in order to ascertain or verify and report upon the facts regarding its financial operation and the result thereof.
Introduction to Auditing MCQs
Mutliple Choice Questions and Answers
1. The word auditing is derived from the Latin word:
a) Autire.
b) Audire.
c) Aukire.
d) Aufire.
Ans: b) Audire.
[Hint: Audire
means to “hear.”]
2. Double entry system was introduced in the year:
a) 1493.
b) 1494.
c) 1495.
d) 1496.
Ans: b) 1494.
3. Who is called father of modern accountancy who also
described the duties and responsibilities of auditor?
a) FW Taylor.
b) Spicer and
Pegler.
c) Luca Paciolo.
d) Batliboi.
Ans: c) Luca Paciolo.
4. Which Act prescribed the qualification for an
auditor for the first time?
a) Companies
Act, 2013.
b) Companies
Act, 1956.
c) Companies
Act, 1947.
d) Companies
Act, 1913.
Ans: d) Companies Act, 1913.
5. The Chartered Accountants Act was passed in the
year:
a) 1947.
b) 1948.
c) 1949.
d) 1950.
Ans: c) 1949.
6. Auditing refers to
a) Preparation
and checking of account.
b) Examination
of accounts of business units only.
c) Examination
of accounts of professional accountants.
d) Checking of
vouchers.
Ans: c) Examination of accounts of professional
accountants.
Also Read: Chapterwise Auditing MCQs
👉 Introduction to Auditing MCQS
7. Auditing is compulsory
for
a) Small scale
business enterprises.
b) All
partnership firms.
c) All joint
stock companies.
d) All proprietary
concerns.
Ans: c) All joint stock companies.
8. Auditing is luxury for
a
a) Joint stock
company.
b) Partnership
firm.
c) Small
shop-keeper.
d) Government
company.
Ans: c) Small shop-keeper.
9. Audit of business is compulsory if annual turnover
exceeds:
a) Rs. 1 Crore
b) Rs. 5 Crores
c) Rs. 10 Crores
d) None of the
above
Ans: a) Rs. 1
Crore
[Hint: If cash transactions are up
to 5% of total gross receipts and payments, the threshold limit of turnover for
tax audit is increased to Rs.10 crores (w.e.f. FY 2020-21)
10. Main object of auditing is
a) Detection of
errors.
b) To find out
whether P&L a/c & B/S show true and fair state affairs.
c) Detection of
frauds.
d) Detection and
prevention of frauds and errors.
Ans: b) To find out whether P&L a/c & B/S show
true and fair state affairs.
11. Which one the following statement is true?
a) Audit is a
systematic and Independent examination of books of accounts.
b) The audit
should be conducted in unbiased manner.
c) Audit report
is the final product of the whole audit work.
d) All of the
above.
Ans: d) All of the above.
12. Auditor is mainly concerned with:
a) Critical
examination of books of accounts.
b) Verification
of accounts prepared by others.
c) Preparation
of audit report.
d) All of the
above.
Ans: d) All of the above.
13. Accounting is necessity where as auditing is a
luxury but for whom?
a) Joint stock
company.
b) Partnership
firm.
c) Small
shop-keeper.
d) Government
company.
Ans: c) Small shop-keeper.
14. The main purpose of audit is to see whether:
a) The balance
sheet shows true and fair view of statement of affairs of the business.
b) The profit
and loss accounts show true and fair operating results.
c) All of the
above.
d) None of the
above.
Ans: c) All of the above.
15. Which one of the following are not the secondary
objects of an
audit?
a) Detection of
errors.
b) To find out
whether P&L a/c & B/S show true and fair state affairs.
c) Detection of
frauds.
d) Detection and
prevention of frauds and errors.
Ans: b) To find out whether P&L a/c & B/S show
true and fair state affairs.
16. Which one of the following statement is true?
a) Audit of sole
proprietorship is voluntary.
b) Audit of
partnership firm is mandatory if turnover exceed Rs.1 Crore (business) or Rs.
50 lakhs (profession).
c) Audit of companies
is compulsory.
d) All of the
above.
Ans: d) All of the above.
17. Accountants and auditors help to ensure mcq
a) Arithmetical
accuracy of books of accounts
b) Financial
soundness of the firm
c) True and fair
view of operating efficiency and financial position
d) None of the
above
Ans: c)
True and fair view of operating efficiency and financial position
18. An in depth examination to detect a suspected
fraud is termed as:
a) Auditing.
b) Investigation.
c) Internal
Check.
d) In depth
analysis.
Ans: b) Investigation.
19. Audit conducted between two annual audits is knows
as:
a) Efficiency
audit.
b) Internal
Audit.
c) Interim audit.
d) Special Audit.
Ans: c) Interim audit.
20. Which audit is conducted every month on a
progressive manner?
a) Efficiency
audit.
b) Internal
Audit.
c) Interim audit.
d) Continuous
audit.
Ans: d) Continuous audit.
21. When the auditor is an employee of the
organization being audited (auditee), the audit is classified as a__ Quality
audit.
a) Internal.
b) External.
c) C. Compliance.
d) D. Both A
& B.
Ans: a) Internal.
22. The_____ is also expected to provide the resources
needed and select staff members to accompany the auditors.
a) Auditor.
b) Client.
c) Internal
auditor.
d) Auditee.
Ans: d) Auditee.
23. Each of the three parties involved in an
audit______ plays a role that contributes to its success.
a) The client,
the auditor, and the auditeer.
b) The client,
the auditor, and the audite.
c) The client,
the moderator, and the auditee.
d) The client,
the auditor, and the auditee.
Ans: d) The client, the auditor, and the auditee.
24.
Like account statement and balance inquires these are:
a) Customer reports
b) Financial reports
c) Management reports
d) General reports
Ans: b) Financial reports
25.
An organization that has two or more owners who are legally responsible for the
debts and taxes of the business is:
a) Social entity
b) Partnership
c) Sole proprietorship
d) Corporation
Ans: b) Partnership
Post a Comment
Kindly give your valuable feedback to improve this website.