ACC311-MIDTERM PAPER
SOLVED BY AHSAN
Question:
Test of controls
comprise of testing of all EXCEPT
Options: Design Implementation
Operating
efficiency
Operating effectiveness
Question:
Analytical
procedures are carried out for which one of
the following purposes?
Options:
To reduce detection
risk
To assess inherent risk
To reduce control risk
To determine detection
risk
Question:
Nature of audit procedure’
refers to which one of the
following desc ription?
Options:
It refers to the purpose i.e. (tests of controls or substantive
procedures) and
their type that is inspections observation inquiry
confirmation recalculation re- performances
or analytical procedures
. It refers
when audit procedures are to be performed
or the period or date to
which the audit evidence applies
. It
refers
to sample size or
number of observations
of a control activity (quantity of
audit evidence)
. It refers
to the nature of testing
and their procedures
that is designing structuring and
compiling work
to be done
Question:
The auditors
are required to perform tests of
controls
when
Options:
The internal
controls are operating inefficiently
Substantive procedures alone provide
sufficient appropriate
audit evidence at the
assertion level.
Substantive procedures alone do not provide sufficient appropriate audit evidence at the assertion level.
Analytical procedures alone do not provide sufficient appropriate audit evidence at the assertion level.
Question:
Following desc riptions are the examples of substantive testing
EXCEPT:
Options:
Test of account
balances to verify the
correctness of
the amounts
Verification that
an operating system and/or applications are configured appropriately
to the companies
needs
Review of minutes of directors;
meetings
and inquiry
Use of statistical sampling to determine the accuracy of financial statement
figures
Question:
How often
the Bank reconciliations should be prepared?
Options: Weekly
Monthly
Quarterly
Annually
Question:
How often Inventory levels
should be checked
against the inventory records
in order to
keep its control effectively?
Options: Rarely Periodically
Never
Daily
Question:
What auditors seek in the register of
non
current assets for
each major group
of assets?
Details of each item its cost and accumulated depreciation
Details of each item its cost and
depreciation
Details of each
item
its cost and capital investment
expected
returns
Question:
Which
one of the following may NOT consist
of any verification methods?
Options:
Closing
balance Acquisitions Disposals Reconciliation
Question:
Which
one of the following may not
be any matter relevant to
verification
of assets?
Options: Taxation
Vouching
Insurance
The letter of representation
Question:
Which
one of the following aspects of assets must be verified?
Options:
Cost
and authorization
Value
and
existence
Beneficial
investment
Presentation in
the accounts
Question:
An Automobile Company hires auditors at
the
year end. Auditors are at the stage
of
verification
and vouching of company’s financials. Before examining the
equity section they develop general
aspects
concerning the owner’s equity. In your
opinion which one of the
following aspects may NOT be considered by the auditors during
this assessment?
Capital stock is
enough to execute the company’s financial needs
Reserves are properly classified
and presented
Movements in reserves are properly authorized
Question:
Non
current assets manufactured
or constructed by the company itself
should reflect
which types of costs in the costing
records?
Options:
Direct costs
plus relevant overhead but
not include any profit
Direct
costs plus relevant
overhead and any profit earned on it
Indirect
costs plus relevant
overhead but not include any profit
Indirect
costs plus relevant
overhead and any profit earned on it
Question:
Which
one of the following matters should
be included in the letter of representation?
Options:
Existence of any immaterial mistake in the statements
Existence of any
fraud or error in the statements
Company’s growth
trend
in the future in figures
Market value of the company’s stock
Question:
Who should
prepare the annual capital
expenditure budgets
of the company in
order to
keep effective?
Options:
Someone directly responsible to
the
shareholders
Someone directly responsible for goods delivery to the customers
Someone directly responsible
to the board of directors
Someone directly responsible to
deal with the suppliers
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