Auditing MCQs
UKPSC Assistant Accountant Exam
Total Marks in this Section: 4 Marks
In this Post You will get Auditing MCQS for UKPSC Assistant Accountant Exam. This UKPSC Assistant Accountant exam is conducted every year by Uttarakhand Government.
This Exam is conducted into two medium – Hindi Medium and English Medium.
Hindi Medium exam is known as UKPSC Sahayak Accountant Exam and English Medium Exam is know as UKPSC Assistant Accountant Exam.
Question Paper Consists of Two Parts – Section A (Commerce and Management) and Section B – Hindi. Section A Consists of 80 Questions and Section B Consists of 20 Questions.
Auditing MCQs is the First Part of Section which covers 04 Marks. We preparing UKPSC Assistant Accountant Exam Notes. We keep our posts updated, so visit our webiste frequently.
1. The word auditing is derived from the Latin word:
a) Autire.
b) Audire.
c) Aukire.
d) Aufire.
Hint: Audire means to “hear.”
Ans: b) Audire.
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.
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. 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.
10. 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.
11. Accounting is necessity whereas 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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.
17. 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.
18. Interim audit refers to
a) Examination of accounts continuously.
b) Examination of accounts intermittently.
c) Audit work to find out and check interim profits of a company.
d) Carrying on audit for bonus purposes at the end of the year.
Ans: c) Audit work to find out and check interim profits of a company.
19. A continuous audit is specially needed for
a) Any trading concern.
b) Smaller concerns.
c) Banking companies.
d) Any manufacturing companies.
Ans: c) Banking companies.
20. Management audit means
a) Audit undertaken on behalf of the management.
b) Evaluating performance of various management processes and functions.
c) Audit undertaken on behalf of Govt. to punish management.
d) Compulsory audit.
Ans: b) Evaluating performance of various management processes and functions.
21. Internal audit means
a) Audit undertaken to ascertain truth and fairness of state of affairs.
b) Audit undertaken internally to evaluate management functions.
c) Audit undertaken by employees of the organization to check financial irregularities.
d) Audit by independent auditor to improve internal affairs.
Ans: c) Audit undertaken by employees of the organization to check financial irregularities.
22. Internal audit is
a) Compulsory for a company with paid-up capital of Rs. 25 lakh and above.
b) Voluntary for a company.
c) Not necessary for a company.
d) Necessary for a company.
Ans: b) Voluntary for a company.
23. Detection of errors and fraud in audit is
a) Primary object.
b) Secondary object.
c) Specific object.
d) None of the above.
Ans: b) Secondary object.
24. Internal auditor is appointed and removed by the
a) Management.
b) Shareholders.
c) Government.
d) C & A-G.
Ans: a) Management.
25. The object of internal check is to
a) Control wastage of resources.
b) Prevent errors and frauds.
c) Verify the cash receipts and payments.
d) Facilitate quick decision by the management.
Ans: b) Prevent errors and frauds.
26. Effective internal check system reduces
a) The liability of auditor.
b) Work of auditor.
c) Both work as well as auditor.
d) Responsibilities of an auditor.
Ans: b) Work of auditor.
27. Internal check is a part of
a) Internal audit.
b) Internal accounting.
c) External audit.
d) Internal control.
Ans: d) Internal control.
28. The objective of internal audit is
a) To prevent error and fraud.
b) To detect error and fraud.
c) To improve financial control.
d) All of the above.
Ans: d) All of the above.
29. Internal check is carried on by
a) Special staff.
b) Internal auditor.
c) Accountant.
d) The members of the staff among themselves.
Ans: d) The members of the staff among themselves.
30. Internal check is suitable for
a) Larger concerns.
b) Smaller concerns.
c) Petty shop- keepers.
d) None of the above.
Ans: a) Larger concerns.
31. Window dressing implies
a) Curtailment of expenses.
b) Checking wastages.
c) Under- valuation of assets.
d) Over- valuation of assets.
Ans: d) Over- valuation of assets.
32. Errors of omission are
a) Technical errors.
b) Error of principle.
c) Compensating errors.
d) None of the above.
Ans: a) Technical errors.
33. Test checking refers to
a) Testing of accounting records.
b) Testing of honesty of employees.
c) Intensive checking of a selected number of transactions.
d) Checking of all transactions recorded.
Ans: c) Intensive checking of a selected number of transactions.
34. Vouching implies
a) Inspection of receipts.
b) Examination of vouchers to check authenticity of records.
c) Surprise checking of accounting records.
d) Examining the various assets.
Ans: b) Examination of vouchers to check authenticity of records.
35. A person qualified for appointment as a Company Auditor is
a) a graduate.
b) a body corporate.
c) officer or employee of company.
d) Chartered accountant
Ans: d) Chartered accountant
36. Contingent liability is
a) Trade liability.
b) Possible liability.
c) Outstanding liability.
d) None of the above.
Ans: d) None of the above.
37. Verification refers to
a) Examination of journal and ledger.
b) Examination of vouchers related to assets.
c) Examining the physical existence and valuation of assets.
d) Calculation of value of assets.
Ans: c) Examining the physical existence and valuation of assets.
38. Stock should be valued at
a) Cost.
b) Market price.
c) Cost price or market price whichever is lower.
d) Cost less depreciation.
Ans: c) Cost price or market price whichever is lower.
39. Valuation of Fixed Assets is based on the concept
a) Going concern.
b) Conservation.
c) Money measurement.
d) Dual aspect.
Ans: a) Going concern.
40. Valuation means
a) Calculating value of assets.
b) Checking the value of assets.
c) Checking the physical existence of assets.
d) Examining the authenticity of assets.
Ans: b) Checking the value of assets.
41. “Auditor is not valuer” was stated in
a) Kingston Cotton Mills case.
b) London & General Bank case.
c) Lee. V. Neuchatel Co. Ltd case.
d) London oil Storage Co. case.
Ans: a) Kingston Cotton Mills case.
42. Fixed assets are valued at
a) Cost.
b) Market price.
c) Cost price or market price whichever is less.
d) Cost less depreciation.
Ans: d) Cost less depreciation.
43. Floating assets are valued at
a) Cost.
b) Market price.
c) Cost price or market price whichever is less.
d) Cost less depreciation.
Ans: c) Cost price or market price whichever is less.
44. The scope of work of internal audit is decided by the
a) Share holders.
b) Management.
c) To improve financial control.
d) All of the above.
Ans: b) Management.
45. First auditor of a company is appointed by the
a) Shareholders.
b) Central Govt.
c) Company Law Board.
d) Board of Directors.
Ans: d) Board of Directors.
46. Which of the following persons is qualified to be a company auditor?
a) An employee of the company.
b) A body corporate.
c) A person who is indebted to the company for an amount exceeding Rs. 1000.
d) A practicing chartered accountant.
Ans: d) A practicing chartered accountant.
47. The first auditor of a company will hold office
a) For a period of one year.
b) Till holding of statutory meeting.
c) Till the conclusion of first annual general meeting.
d) Till a new auditor is appointed.
Ans: c) Till the conclusion of first annual general meeting.
48. Normally, a company auditor is appointed by the
a) Central Government.
b) Shareholders.
c) Board of Directors.
d) Company Law board.
Ans: b) Shareholders.
49. An auditor in a casual vacancy is appointed by the
a) Board of Directors.
b) Shareholders.
c) Central Government.
d) Company Law board.
Ans: a) Board of Directors.
50. If an auditor is not appointed at annual general meeting, he is appointed by the
a) The Central Government.
b) Board of Directors.
c) Shareholders.
d) The existing auditor shall continue to be auditor of the company.
Ans: d) The existing auditor shall continue to be auditor of the company.
51. A special auditor is appointed by the
a) Shareholders.
b) Board of Directors.
c) Central Government.
d) CAG.
Ans: c) Central Government.
52. A government Co. auditor may be appointed by the
a) CAG.
b) Shareholders.
c) Central Government.
d) None of the above.
Ans: a) CAG.
53. A company auditor can be removed before expiry of his term by
a) Shareholders.
b) Board of Directors.
c) Central Government.
d) State Government.
Ans: a) Shareholders.
54. Remuneration of a company auditor is fixed by the
a) Shareholders.
b) Board of Directors.
c) Central Government.
d) Appointing authority.
Ans: d) Appointing authority.
55. A company auditor, in general has to submit his report to
a) Shareholders.
b) Board of Directors.
c) Central Government.
d) CAG.
Ans: a) Shareholders.
56. An auditor of Government company has to submit his report to the
a) Shareholders.
b) Central Government.
c) CAG.
d) Ministry concerned.
Ans: b) Central Government.
57. Auditor should be dutiful like a
a) A watch dog.
b) A blood hound.
c) A detective.
d) An insurer.
Ans: a) A watch dog.
58. Dividend cannot be paid out of
a) Capital profit.
b) Capital receipts.
c) Revenue receipts.
d) None of the above.
Ans: b) Capital receipts.
59. Capital profit imply profit earned
a) Through business transaction.
b) From capital.
c) From sale of fixed assets.
d) From sale of current assets.
Ans: c) From sale of fixed assets.
60. In his report, the auditor gives his
a) Judgment.
b) Opinion.
c) Guarantee to correctness of accounts.
d) True state of affairs.
Ans: b) Opinion.
61. An auditor can be held liable under Chartered Accountant Act 1949 for
a) Negligence.
b) Criminal offence.
c) Professional misconduct.
d) Breach of contract.
Ans: c) Professional misconduct.
62. The main purpose of management audit is to
a) Review the management operations.
b) Check arithmetical accuracy.
c) Prevent travel.
d) Prevent error.
Ans: a) Review the management operations.
63. Management audit is
a) Compulsory.
b) Not compulsory.
c) Compulsory under Income Tax Act.
d) Compulsory under Indian Contract Act.
Ans: b) Not compulsory.
64. Institute of chartered Accounts of India was established in the year
a) April 1, 1956.
b) April 1, 1949.
c) July 1, 1956.
d) July 1, 1949.
Ans: d) July 1, 1949.
65. Auditor is an ________ of a shareholder
a) Owner.
b) Agent.
c) Employer.
d) Creditor.
Ans: b) Agent.
66. Financial auditor submits reports to the:
a) Shareholder.
b) Board of director.
c) Debtors.
d) Employees.
Ans: a) Shareholder.
67. Cost auditor submits reports to the:
a) Shareholder.
b) Board of directors.
c) Employees.
d) Creditors.
Ans: b) Board of directors.
68. Audit under any statute in a country is called:
a) Final audit.
b) Internal audit.
c) Proprietary Audit.
d) Statutory audit.
Ans: d) Statutory audit.
69. CAATTS is also known as:
a) Cost and Accounts Treatments.
b) Computer Assisted Audit Tools and Techniques.
c) Classification and Accounting of Tax Tools.
Ans: b) Computer Assisted Audit Tools and Techniques.
70. ________ audit is not a statuary requirement
a) Management.
b) Financial.
c) Tax Audit.
Ans: a) Management.
71. Government may order for cost audit under the
a) Section 227.
b) Section 223A.
c) Section 223B (Old). Section 148 of Companies Act, 2013
d) Section 224.
Ans: c) Section 223B (Old). Section 148 of Companies Act, 2013
72. Accounting standards are prepared by
a) SEBI.
b) RBI.
c) ICAI.
d) ITA.
Ans: c) ICAI.
73. The auditors are liable under
a) Companies Act Only.
b) Income Tax Act Only.
c) All above.
Ans: c) All above.
74. The maximum number of audit assignment an auditor can accept is limited to ________ companies
a) 10.
b) 15.
c) 20.
Ans: c) 20.
75. _____________ is a written plan containing details with regard to the conduct of a particular audit
a) Audit Note book.
b) Audit Programme.
c) Audit files.
Ans: b) Audit Programme.
76. ____________ is the verification of books of accounts from Income tax point of view
a) Cost audit.
b) Tax audit.
c) Management audit.
Ans: b) Tax audit.
77. Capitalization of reserves means:
a) Creation of provision.
b) Capital Reserve.
c) Declaration of dividend.
d) Issue of bonus shares.
Ans: d) Issue of bonus shares.
78. Provisions regarding bonus issue should be given in ______________ document
a) Memorandum of association.
b) Articles of association.
c) Prospectus.
d) None of the above.
Ans: b) Articles of association.
79. Balance remaining in the forfeited Account after reissue is transferred to ___________ account
a) General reserve.
b) Capital reserve.
c) Premium account.
Ans: b) Capital reserve.
80. Audit report is meant for the _________ of the company.
a) Shareholders.
b) Creditors.
c) Employees.
d) Bankers.
Ans: a) Shareholders.
81. An audit report is the final product of audit work by:
a) Audit staff.
b) Auditor.
c) Management.
d) Internal auditor.
Ans: b) Auditor.
82. The audit report should be signed in the personal name of the:
a) Audit staff.
b) Auditor.
c) Management.
d) Internal auditor.
Ans: b) Auditor.
83. A clean report is issued when, the auditor is satisfied with the:
a) Fairness of Balance Sheet and Profit and Loss account.
b) All the contents of the financial statements.
c) Evidences, documents and explanation given by his clients.
d) All of the above.
Ans: d) All of the above.
84. Audit report with reservations is knows as:
a) Clean Report.
b) Qualified Report.
c) Adverse opinion.
d) Disclaimer of Opinion.
Ans: b) Qualified Report.
85. Negative report is made when auditor is:
a) Satisfied with the fairness of Balance Sheet and Profit and Loss account.
b) Not agree with affirmation made by the management in the books.
c) Unable to form overall opinion on Financial Statement.
d) All of the above.
Ans: b) Not agree with affirmation made by the management in the books.