BCom Third Year (Sem 5 & 6) Auditing – Daily Revision MCQ (English Medium)
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What is the primary objective of an audit of financial statements?
Chapter 1: Nature and Objectives of Auditing
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Answer: C. To express an opinion on whether the statements show a true and fair view
The auditor's main aim is to report an opinion on the true and fair view; detecting errors and frauds is a secondary objective.Recording the purchase of machinery in the Purchases Account (as if it were goods) is which type of error?
Chapter 1: Nature and Objectives of Auditing
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Answer: A. Error of principle
Treating capital expenditure as revenue expenditure breaks an accounting principle, so it is an error of principle.An audit in which the auditor's staff checks the accounts at regular intervals throughout the year is called what?
Chapter 2: Types of Audit
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Answer: B. Continuous audit
Continuous audit is carried on throughout the year at regular intervals, unlike a final audit done after the year closes.What is internal check?
Chapter 3: Internal Control and Internal Check
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Answer: D. An arrangement of duties so that one person's work is automatically checked by another
Internal check divides work so that no single person handles a transaction from start to finish, and errors or frauds are caught automatically.What does vouching mean?
Chapter 4: Vouching
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Answer: C. Checking entries in the books with documentary evidence
Vouching tests the truth of book entries against supporting documents (vouchers) and is called the backbone of auditing.Verification of assets is mainly concerned with which of the following?
Chapter 5: Verification and Valuation of Assets and Liabilities
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Answer: A. Existence, ownership and possession of the asset
Verification confirms that the asset exists, belongs to the business, is in its possession and is free from undisclosed charge; valuation checks its value.Under the Companies Act, 2013, who appoints the auditor of a non-government company (other than the first auditor)?
Chapter 6: Company Auditor: Appointment, Rights and Duties
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Answer: B. The shareholders at the annual general meeting
Subsequent auditors of a company are appointed by the members (shareholders) at the AGM; the Board appoints only the first auditor or fills a casual vacancy in certain cases.Which of the following is a right of a company auditor?
Chapter 6: Company Auditor: Appointment, Rights and Duties
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Answer: D. To access the books, accounts and vouchers at all times
A company auditor has the right of access at all times to the books of account and vouchers; his remuneration is fixed by the members.An audit report in which the auditor expresses no reservations about the financial statements is called what?
Chapter 7: Audit Report
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Answer: C. Clean (unmodified) report
A clean or unmodified report says the statements give a true and fair view without any qualification.In a computerised environment, checking only the input and output of a system without testing how the computer processes the data is called what?
Chapter 8: Tax Audit and Audit in a Computerised Environment
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Answer: A. Auditing around the computer
Auditing around the computer treats the computer as a black box and compares inputs with outputs.
BCom Third Year (Sem 5 & 6): MCQ in other subjects
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.