BCom Third Year (Sem 5 & 6) Auditing – Daily Revision MCQ (English Medium)
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The word "audit" comes from the Latin word "audire". What does "audire" mean?
Chapter 1: Nature and Objectives of Auditing
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Answer: B. To hear
"Audire" means to hear; in early times accounts were read aloud to the auditor, who listened to them."Teeming and lading" is a fraud connected with which of the following?
Chapter 1: Nature and Objectives of Auditing
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Answer: B. Misappropriating cash received from debtors and covering it with later receipts from other debtors
In teeming and lading, cash from one debtor is taken and the shortage is hidden by crediting later collections from other debtors to that account.An audit carried out between two annual audits, for example to help the directors declare an interim dividend, is called what?
Chapter 2: Types of Audit
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Answer: D. Interim audit
An interim audit is done between two annual audits, usually up to a date within the year, such as for declaring an interim dividend.Which of the following is a basic principle of a good internal check system?
Chapter 3: Internal Control and Internal Check
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Answer: A. No single person should handle a transaction completely from beginning to end
Internal check divides work so that no one person controls a whole transaction; another person's work then checks it automatically.Vouching is often described as which of the following?
Chapter 4: Vouching
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Answer: C. The backbone (essence) of auditing
Vouching is called the backbone of auditing because it proves that recorded transactions really happened, were authorised and were correctly recorded.On what basis is closing stock (inventory) normally valued in the final accounts?
Chapter 5: Verification and Valuation of Assets and Liabilities
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Answer: B. At cost or net realisable value, whichever is lower
By the conservatism principle (and AS 2), inventory is valued at cost or net realisable value, whichever is lower.Under the Companies Act, 2013, how can a company's auditor be removed before the end of the term?
Chapter 6: Company Auditor: Appointment, Rights and Duties
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Answer: D. By a special resolution of the members, with the prior approval of the Central Government
Section 140(1) allows removal before the term ends only by a special resolution of members after obtaining the Central Government's prior approval.Under Section 139(2) of the Companies Act, 2013, for how long can an individual be appointed auditor of a listed company?
Chapter 6: Company Auditor: Appointment, Rights and Duties
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Answer: A. Not more than one term of five consecutive years
An individual auditor may serve at most one term of five consecutive years; two terms of five years is the limit for an audit firm.When the auditor cannot obtain sufficient appropriate audit evidence and the possible effects are both material and pervasive, what does the report contain?
Chapter 7: Audit Report
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Answer: D. A disclaimer of opinion
Under SA 705, inability to get enough evidence with possibly material and pervasive effects leads to a disclaimer; an adverse opinion is for misstatements actually found to be material and pervasive.In audit of a computerised environment, what does CAAT stand for?
Chapter 8: Tax Audit and Audit in a Computerised Environment
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Answer: C. Computer Assisted Audit Techniques
CAATs are Computer Assisted Audit Techniques: the auditor uses software (e.g. test data, audit software) to test records kept on the computer.
BCom Third Year (Sem 5 & 6): MCQ in other subjects
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All questions are written by PadhaiNotes in our own words from the common syllabus of Maharashtra universities (NEP). Your own university's syllabus may differ a little.