Practice Test

Q1) The following points should be noted or checked by the auditor in verification of an asset Show Answer

Q2) While checking the cut off procedures ,The auditor should ensure that Show Answer

Q3) Auditor should verify stocks which are not lying with the concern e.g. goods on consignment Show Answer

Q4) Closing stock with consignee is to be shown as the asset of Show Answer

Q5) Stock of gods on consignment should be valued at Show Answer

Q6) Prior period expenses are Show Answer

Q7) Prior period expenses are Show Answer

Q8) If the market value of the security is less than the outstanding amount of loan taken Show Answer

Q9) A mortgage duly registered under the Transfer of Property Act is known as Show Answer

Q10) __________ involves depositing the title deeds of the property with the lender as security Show Answer

Q11) Deferred credits from machinery suppliers Show Answer

Q12) An auditor is verifying valuation of building which has been self constructed by the client. Which of the following document is least relevant to the auditor for verification purposes? Show Answer

Q13) Equity shares of XY Ltd held by ABC Ltd are in the custody of stock holding corporation of India limited (SHCIL). The auditor may verify this investment by Show Answer

Q14) While reconciling a client's annual physical inventorywith book stock, an auditor observed that for certain items the stock in hand was more than that shown in the books. This could be the result of the client's failure to record Show Answer

Q15) Goods received notes support entries in Show Answer

Q16) Which of the following assets cannot be subjected to physical verification Show Answer

Q17) Verification involves obtaining and examining evidence in respect of an item of ____or ____ Show Answer

Q18) _____means obtaining written evidence from outside parties regarding existence of an asset or liability Show Answer

Q19) _____ procedures ensure separation of transactions of the current year from those of the next year Show Answer

Q20) If any debtor has become insolvent after the balance sheet date provision________ made for such debts as bad debts Show Answer

Q21) Auditor _____ensure that the book stocks are adjusted for any excess or shortage found on physical verification Show Answer

Q22) If the stocks are undervalued the profits and assets will be_______ Show Answer

Q23) Auditor should see that loose tools have been disclosed separately as an item of _____asset Show Answer

Q24) In case of right shares acquired in the year their cost should be ______ the original shares Show Answer

Q25) In case of _____shares received during the year no adjustment should be made to the cost of original shares Show Answer

Q26) In case of a company the amount of depreciation should be in accordance with the provisions of the Companies Act and schedule _______thereto Show Answer

Q27) Revaluation reserve ___available for distribution i.e. payment of dividend Show Answer

Q28) Mortgage means a ____ on immovable property to secure a debt Show Answer

Q29) A mortgage duly registered under the Transfer of Property Act is known as ___- mortgage Show Answer

Q30) ______mortgage means simply depositing the title deeds of the property with the lender as a security Show Answer

Q31) Bills receivable discounted before maturity ,but likely to be dishonored on presentation are considered as _______liabilities Show Answer

Q32) During the scrutiny of ledger, auditor should see that all entries are posted in sequence of dates i.e. ____order Show Answer

Q33) During scrutiny of ledger, auditor should see that against each entry there is a reference of the ______ of the original book or register Show Answer

Q34) If the balance in debtor's account is a credit balance, it indicates that _____are more than sales made Show Answer

Q35) The credit balance in the debtor's accounts are shown on the_______ side of the Balance sheet Show Answer

Q36) Credit balances in the debtors counts _____deducted form the gross debit balances in the debtors accounts Show Answer

Q37) In the _______form of confirmation, the debtor is asked to write back whether he agrees or not with the balance shown Show Answer

Q38) In the _______form of confirmation, the debtor is asked to write back only if he disagrees with the balance shown Show Answer

Q39) The debtors confirmations should be returned to the ___and not to the.___ Show Answer

Q40) Verification involves obtaining and examining evidence in respect of an item of revenue of expenditure. Show Answer

Q41) Confirmation means obtaining written evidence from management regarding existence of an asset or liability. Show Answer

Q42) Verification involves obtaining and examining evidence in respect of an item of asset or liability at the beginning of the year. Show Answer

Q43) Verification means comparing the entries in books of accounts with documentary evidence in support thereof. Show Answer

Q44) When the auditor observes whether the inventory is being taken by the staff of the concern in the right manner he is said to employ the audit technique of inspection Show Answer

Q45) The opening balance of the stock book for the next year should be the closing stock of the current year as per the physical inventories. Show Answer

Q46) If the stocks are overvalued the profits and assets will be overstated Show Answer

Q47) Investments are valued at the market price as at the year end Show Answer

Q48) Depreciation is to be provided on the investment annually. Show Answer

Q49) In case of Bonus shares received during the year, no adjustment should be made to the cost of original shares. Only the number of shares should be increased resulting in a lower average cost per share. Show Answer

Q50) Investment in subsidiary companies is valued at cost ,even if the subsidiary company has incurred any losses Show Answer

Q51) Patents should be written off over their legal period of validity or their working life whichever is shorter. Show Answer

Q52) In case patents were developed in house, they are shown in the books at nil value Show Answer

Q53) Interest on loans taken to purchase machineries upto the date of completion of the project should be included in the cost of the machineries. Show Answer

Q54) Increase in value of plant and machineries due to revaluation should be debited to plant and machineries account and credited to profit and loss account. Show Answer

Q55) No depreciation can be claimed in respect of freehold land. Show Answer

Q56) A decrease in the value of freehold land on revaluation should be debited to profit and loss account and credited to land account. Show Answer

Q57) A loan should be classified as secured only to the extent of the market value of the security. Show Answer

Q58) The entry for amounts payable to suppliers of machinery under deferred payment arrangements is passed for the full amount of bills of exchange including the future discount charges Show Answer

Q59) If an asset is in possession of a company, it is necessarily owned by the company. Show Answer

Q60) An asset which is owned by a company need not necessarily be in its possession. Show Answer

Q61) An invoice is a reliable evidence that the asset owned by the company. Show Answer

Q62) Goods in transit are to be included in closing stock in trade. Show Answer

Q63) Inspection means observation of an asset. Show Answer

Q64) Confirmation means obtaining documents from the client supporting the voucher Show Answer

Q65) It is the responsibility of the auditor to carry out physical verification of fixed assets at appropriate intervals in order to ensure that they are in existence. Show Answer

Q66) In case of bonus shares received during the year adjustment should be made to the cost of original shares. Show Answer

Q67) Investments in subsidiary companies are valued at cost or net realisable value whichever is lower Show Answer

Q68) When inventory is under the custody and control of a third party the auditor must attend the physical verification of the inventories. Show Answer

Q69) Vouching includes verification. Show Answer

Q70) Obtaining direct confirmation from debtors does not mean that the debt will be recovered Show Answer

Q71) Direct confirmation procedures for debtors' balances need not be carried out with the consent of the concern Show Answer

Q72) The detailed procedure for obtaining debtors confirmation (from whom, when, how, in what from etc) is to be decided by the entity. Show Answer

Q73) In the negative form of confirmation the debtor is asked to write back whether he disagrees with the balance shown. Show Answer

Q74) In positive form of confirmation the debtor is asked to write back only if agrees with the balance shown. Show Answer

Q75) The positive form of confirmation is used when many parties are likely to agree with book balances shown. Show Answer

Q76) The negative form of confirmation is used when few accounts having large balances are involved. Show Answer

Q77) The debtor confirmation should be returned to the client. Show Answer

Q78) Which of the following is not true about verification of assets? Show Answer

Q79) Which of the following Asset cannot be Physically verfied? Show Answer

Q80) Which of the following assets is least likely subjected to lien? Show Answer

Q81) Revalued Amount of land should be transfer to_____ Show Answer

Q82) Which of the following would give an assurance that debtors mentioned in the Balance sheet actually exist? Show Answer

Q83) While counting cash on hand the auditor should Show Answer

Q84) Expenditure on plant & machinery should be properly classified in to Show Answer

Q85) Verfication involves Show Answer

Q86) Who should see that a proper register of furniture is maintained by the client Show Answer

Q87) Fixed assets are valued at Show Answer

Q88) Balance Sheet should provide Show Answer

Q89) Self constructed assets should be valued on the basis of Show Answer

Q90) Auditor at the time of Verification of Assets shall Show Answer

Q91) Patents are shown at Show Answer

Q92) Depreciation does not arise from Show Answer

Q93) Uncalled amount on partly paid shares held as investment is shown as Show Answer

Q94) Which of the following is a revenue reserve? Show Answer

Q95) Current investments are held for Show Answer

Q96) The following is a wasting asset Show Answer

Q97) patent rights are Show Answer

Q98) For verification of liabilities which of the following is the most important object? Show Answer

Q99) Arrears of Pref dividend is a Show Answer

Q100) unearned portion of income not relating to the period under audit should be shown as current liabilities Show Answer

Q101) stock is to bevalued at Show Answer

Q102) Copy rights can be the property of Show Answer

Q103) Goods Received Notes support Entries in Show Answer

Q104) Carriage on purchase of machinery should be classified into Show Answer

Q105) Which of the following assets cannot be subjected to physical verification Show Answer

Q106) Which of the following is not a revenue expenditure Show Answer

Q107) Which is of the following can be a revenue reserve? Show Answer

Q108) Verfication means Show Answer

Q109) Patents are depreciated by Show Answer

Q110) Bill discounted with bank can be verified by Show Answer

Q111) Calls in arrears can be verified from Show Answer

Q112) Authorised capital can be checked from Show Answer

Q113) Interet paid out of capital is considered as Show Answer

Q114) Which of the following is not true about verification of assets? Show Answer

Q115) Which of the following Asset cannot be Physically verfied? Show Answer

Q116) Which of the following assets is least likely subjected to lien? Show Answer

Q117) Revalued Amount of land should be transfer to_____ Show Answer

Q118) Which of the following would give an assurance that debtors mentioned in the Balance sheet actually exist? Show Answer

Q119) While counting cash on hand the auditor should Show Answer

Q120) Expenditure on plant & machinery should be properly classified in to Show Answer

Q121) Verfication involves Show Answer

Q122) Who should see that a proper register of furniture is maintained by the client Show Answer

Q123) Fixed assets are valued at Show Answer

Q124) Balance Sheet should provide Show Answer

Q125) Self constructed assets should be valued on the basis of Show Answer

Q126) Auditor at the time of Verification of Assets shall Show Answer

Q127) Patents are shown at Show Answer

Q128) Depreciation does not arise from Show Answer

Q129) Uncalled amount on partly paid shares held as investment is shown as Show Answer

Q130) Which of the following is a revenue reserve? Show Answer

Q131) Current investments are held for Show Answer

Q132) The following is a wasting asset Show Answer

Q133) patent rights are Show Answer

Q134) For verification of liabilities which of the following is the most important object? Show Answer

Q135) Arrears of Pref dividend is a Show Answer

Q136) unearned portion of income not relating to the period under audit should be shown as current liabilities Show Answer

Q137) stock is to bevalued at Show Answer

Q138) Copy rights can be the property of Show Answer

Q139) Goods Received Notes support Entries in Show Answer

Q140) Carriage on purchase of machinery should be classified into Show Answer

Q141) Which of the following assets cannot be subjected to physical verification Show Answer

Q142) Which of the following is not a revenue expenditure Show Answer

Q143) Which is of the following can be a revenue reserve? Show Answer

Q144) Verfication means Show Answer

Q145) Patents are depreciated by Show Answer

Q146) Bill discounted with bank can be verified by Show Answer

Q147) Calls in arrears can be verified from Show Answer

Q148) Authorised capital can be checked from Show Answer

Q149) Interet paid out of capital is considered as Show Answer