Practice Test

Q1) Audit sampling enables the auditor to ______ audit evidence about some characteristic of the items selected Show Answer

Q2) While designing an audit sample the auditor should consider Show Answer

Q3) The risk that, although the sample result does not support the auditor's assessment of control risk, the actual compliance rate would support such an assessment is known as Show Answer

Q4) The risk that although the sample result supports the auditor's assessment of control risk ,the actual compliance rate would not support ,such an assessment is known as Show Answer

Q5) The risk that, although the sample result supports conclusion that a recorded or class of transactions is materially misstated, in fact it is not materially misstated is known Show Answer

Q6) The risk that, although the sample result supports the conclusion that a recorded account balance or class of transactions is not materially misstated, in fact it is materially misstated is known as Show Answer

Q7) The risk of over reliance and the risk of incorrect acceptance Show Answer

Q8) The risk of under reliance and the risk of incorrect rejection Show Answer

Q9) Tolerable error is the ______ error in the population that the auditor would be willing to accept and still conclude that the result from the sample has achieved the audit objective Show Answer

Q10) In substantive procedures the tolerable error is Show Answer

Q11) In tests of control the tolerable error is the Show Answer

Q12) This method of selecting sample ensures that all items in the population have an equal chance of selection Show Answer

Q13) This method of sample selection involves selecting items using a constant interval between selections, the first interval having a random start Show Answer

Q14) letter of weakness deals with weaknesses in Show Answer

Q15) SA which deals with audit sampling Show Answer

Q16) Internal auditors are appointed by Show Answer

Q17) _____checking means to select and examine a representative sample from a large number of similar items Show Answer

Q18) Opening and closing entries _ ____ suitable for test checking Show Answer

Q19) Bank reconciliation statements _____ suitable for test checking Show Answer

Q20) ______checking is the checking of totals and calculations etc in subsidiary books, checking of posting into the ledgers etc Show Answer

Q21) Vide SA 530 audit _______ means the application of audit procedures to less than 100% of the items within an account balance Show Answer

Q22) The _______is the entire set of data from which the auditor wished to sample in order to reach a conclusion Show Answer

Q23) The individual items that make up the _____are known as sampling units Show Answer

Q24) _____error is the maximum error in the population that the auditor would be willing to accept and still concludes that the result from the sample has achieved the audit objectives. Show Answer

Q25) The _______ tolerable error the greater the sample size will need to be Show Answer

Q26) The smaller the tolerable error the ____sample size will need to be Show Answer

Q27) In tests of control the ______is the maximum rate of deviation from a prescribed control procedure that the auditor would be willing to accept Show Answer

Q28) The auditor should select sample items in such a way that the sample can be expected to be ____of the population Show Answer

Q29) _____method of selecting sample ensures that all items in the population have an equal chance of selection Show Answer

Q30) _______controls aim to ensure that the management policies in respect of the operations and administration of the concern are implemented Show Answer

Q31) _____is a separate component of internal control established to determine whether other internal controls are well designed and properly operated Show Answer

Q32) the internal audit department ________involved in the performance of executive actions Show Answer

Q33) the copy of the report of the internal auditor_____ made available to the statutory auditor Show Answer

Q34) The internal audit work _____planned in consultation with the external auditor Show Answer

Q35) Internal auditor is appointed by the _____ Show Answer

Q36) Internal auditor can be removed________ Show Answer

Q37) Division of work is an integral aspect of________. Show Answer

Q38) In ______the work is divided in such a way that the documents prepared by one person are automatically checked by other persons Show Answer

Q39) In ______the duties of the employees are changed from time to time Show Answer

Q40) In test checking the selection of sample depends upon the personal judgment of the auditor Show Answer

Q41) Test checking emphasizes quantity rather than quality of checking. Show Answer

Q42) The higher the risk the auditor is willing to accept, the greater the sample size will need to be. Show Answer

Q43) Tolerable error is the minimum errors in the population that the auditor would be willing to accept and still conclude that the result from the sample has achieved the audit objective. Show Answer

Q44) Tolerable error is the maximum errors in the population that the auditor would be willing to ignore and still conclude that the result from the sample has achieved the audit objective Show Answer

Q45) Tolerable error is the reasonable error in the population that the auditor would be willing to accept and still concludes that the result from the sample has achieved the audit objective. Show Answer

Q46) The smaller the tolerable error the greater the sample size will need to be Show Answer

Q47) Three methods of sampling commonly used are 1. Random selection 2. Simple random sampling and 3. Stratified sampling Show Answer

Q48) Random selection method of sampling is known as interval sampling. Show Answer

Q49) Systematic selection may be of the following types-1. Block sampling 2. Cluster sampling Show Answer

Q50) Basically the management is responsible for establishing and operating the internal control system Show Answer

Q51) The responsibility of the statutory auditor is to some extent reduced if he has relied upon the internal audit. Show Answer

Q52) Internal auditor must be a qualified chartered accountant Show Answer

Q53) Once internal control system is implemented there can be no fraud or error. Show Answer

Q54) Internal control is part of the broader system of internal audit Show Answer

Q55) Separate staff is appointed to conduct the internal checks. Show Answer

Q56) Internal check is carried out after the work is done. Show Answer

Q57) Internal check helps to prevent rather than detect errors. Show Answer

Q58) An essential feature of internal check is that an employee has an exclusive control over specific work without any fear of external check. Show Answer

Q59) Internal audit is done by actual administrative staff during day to day operations Show Answer

Q60) Internal audit is carried out during the work itself. Show Answer

Q61) Internal audit helps to detect rather than prevent errors. Show Answer

Q62) Internal auditor reports to the shareholders whether the internal controls are true and fair Show Answer

Q63) Statutory auditor reports to the management whether the internal controls are true and fair Show Answer

Q64) Internal auditor of a company whose managing director committed a fraud is liable to the shareholders for negligence Show Answer

Q65) The rights and duties of internal auditor are laid down in the companies Act. Show Answer

Q66) Internal auditor must be appointed as the chairman of the audit committee of a public company as per section 292A of the companies Act Show Answer

Q67) Internal auditor is responsible for establishing the system of internal controls. Show Answer

Q68) The first internal auditor must be appointed within 30 days of the incorporation of the company. Show Answer

Q69) The internal auditor of a company must be appointed in the annual general meeting every year. Show Answer

Q70) The internal auditor of a company must be appointed by passing a special resolution Show Answer

Q71) If an internal auditor resigns the casual vacancy must be filled in by passing a resolution in an extraordinary general meeting of the company. Show Answer

Q72) The internal auditor must inform the registrar of companies of his appointment within 30 days Show Answer

Q73) A person who is indebted to the company for an amount exceeding Rs.1000 cannot be appointed as the internal auditor of the company Show Answer

Q74) A relative of a director cannot be appointed as internal auditor of a company. Show Answer

Q75) A shareholder of a company cannot be appointed as the internal auditor of the company Show Answer

Q76) Schedule VI to the companies Act requires that the remuneration of internal auditor must be disclosed separately in the final accounts of the company Show Answer

Q77) Internal auditor has the right to attend the annual general meeting of the company u/s 231 of the companies Act. Show Answer

Q78) An internal auditor cannot carry out internal audit of more than 20 concerns belonging to the group Show Answer

Q79) Internal auditors are appointed by the statutory auditors Show Answer

Q80) Auditor must do a 100% checking of all transactions and balances Show Answer

Q81) Statutory audit cannot start unless internal audit is complete Show Answer

Q82) What is the correct sequence of the following stages
1) statutory audit
2) internal audit
3)internal check
Show Answer

Q83) Routine checking is Show Answer

Q84) GAAP stands for Show Answer

Q85) Test checking is Show Answer

Q86) Internal checks help to prevent rather than to detect the _________ Show Answer

Q87) Routine checking can ensure Show Answer

Q88) Test check should be used when Show Answer

Q89) In test checking the auditor should Show Answer

Q90) Advantages of test check Show Answer

Q91) Size of the sample depends on Show Answer

Q92) Audit sampling is Show Answer

Q93) Factors affecting the sample size in audit is Show Answer

Q94) Stratification is the process of Show Answer

Q95) Following are the types of random sampling Show Answer

Q96) Good internal control system indicates Show Answer

Q97) Out of the following which is not a method for reviewing internal control system Show Answer

Q98) The objective of internal control is to Show Answer

Q99) In internal check Show Answer

Q100) Internal control is subject to Show Answer

Q101) If internal auditor traces certain loopholes in internal check, the auditor should report the matter to Show Answer

Q102) Internal auditor is appointed by Show Answer

Q103) Statutory Auditors is a Show Answer

Q104) Factors to be considered while test checking Show Answer

Q105) Scope of internal audit is decided by Show Answer

Q106) Statutory auditor has a right to attend Show Answer

Q107) Internal control includes Show Answer

Q108) Independent Auditor may apply Show Answer

Q109) Types of Non-random sampling Show Answer

Q110) Routine checking involves checking of Show Answer

Q111) The scope of work of the internal auditor is determined by_________ Show Answer

Q112) Random sampling is Show Answer

Q113) The test checks are generally applied by the _______auditor Show Answer

Q114) Internal control has the limitation of Show Answer

Q115) Internal auditor submits report to Show Answer

Q116) Internal control includes Show Answer

Q117) Main duty of statutory auditor is Show Answer

Q118) Test checks are generally applied by Show Answer

Q119) Letter of weakness' deals with weakness in Show Answer