Auditing MCQs and Notes

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📊 Auditing
Q. What would be the most likely cause of an unfavorable labor rate variance together with a favorable labor efficiency variance?
  • (A) The employment of more highly skilled staff than budgeted
  • (B) Poor wage negotiation by the Human Resources manager
  • (C) The employment of less well-trained staff than intended
  • (D) Improved production efficiencies
💬 Discuss
✅ Correct Answer: (A) The employment of more highly skilled staff than budgeted
📊 Auditing
Q. Inflation:
  • (A) Reduces the cost of living
  • (B) Reduces the standard of living
  • (C) Reduces the price of products
  • (D) Reduces the purchasing power of a pound
💬 Discuss
✅ Correct Answer: (D) Reduces the purchasing power of a pound
📊 Auditing
Q. Auditors of a joint stock company are appointed by ________
  • (A) Directors of the company
  • (B) Annual general meeting
  • (C) election at the annual general meeting
  • (D) debenture holders
💬 Discuss
✅ Correct Answer: (C) election at the annual general meeting
📊 Auditing
Q. Which one is not a feature of process costing?
  • (A) Classification of costs into fixed and variable
  • (B) Emergence of more than one product
  • (C) Equivalent production
  • (D) None of these
💬 Discuss
✅ Correct Answer: (D) None of these
📊 Auditing
Q. An audit programme is:
  • (A) a description, memorandum or an outline of the work to be done in a business
  • (B) the rules and regulations prescribed for writing up the books of accounts
  • (C) to gain knowledge of clients accounting system
  • (D) a trial work
💬 Discuss
✅ Correct Answer: (B) the rules and regulations prescribed for writing up the books of accounts
📊 Auditing
Q. The factor that affect reasonable assurance include all of the following except:
  • (A) Use of testing
  • (B) Interest limitations of accounting and internal control
  • (C) Remuneration of the auditor
  • (D) Persuasive nature of audit evidence
💬 Discuss
✅ Correct Answer: (D) Persuasive nature of audit evidence
📊 Auditing
Q. The work of one clerk is automatically check by another clerk is called:
  • (A) Internal control
  • (B) Internal check
  • (C) Internal audit
  • (D) None of the above
💬 Discuss
✅ Correct Answer: (B) Internal check
📊 Auditing
Q. Which of the following statements is not true:
  • (A) Valuation of assets is the responsibility of management
  • (B) The auditor can rely on a certificate issued by an authorized valuation as to the valuation of assets in the balance sheet
  • (C) The auditor should value the asset as per generally accepted accounting principle
  • (D) Valuation is no part of auditor’s duty
💬 Discuss
✅ Correct Answer: (C) The auditor should value the asset as per generally accepted accounting principle
📊 Auditing
Q. Which one of the following is considered as the formal opinion or disclaimer thereof issued by an independent auditor as a result of audit or evaluation performed on a legal entity:
  • (A) Financial report
  • (B) Financial statement
  • (C) Director report
  • (D) Auditor’s report
💬 Discuss
✅ Correct Answer: (D) Auditor’s report
📊 Auditing
Q. While verifying intangible assets, an auditor would have recomputed amortization charges and determine whether amortization period is reasonable. The auditor tries to establish _______by doing it
  • (A) valuation
  • (B) existence
  • (C) disclosure
  • (D) possession
💬 Discuss
✅ Correct Answer: (A) valuation

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