MCQ Bank

Photocopied and facsimile documents are generally less reliable because their authenticity may be difficult to verify. Reliable audit evidence usually requires original documentary evidence or evidence supported by effective controls.

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Q181

Audit evidence, including information received from third parties in writing is called:

A) None of the given options
B) Mixed audit evidence
C) External audit evidence
D) Internal audit evidence

AI Explanation

Written information received from third parties is considered external audit evidence. It is generally more reliable because it comes from sources independent of the entity being audited.

ACC311 Final Term AI Solved

Q182

The quantity of audit evidence needed is NOT effected by:

A) Type of organization
B) Quality of audit
C) Inherent limitations
D) Risk of misstatement

AI Explanation

The quantity of audit evidence required depends on factors such as risk of misstatement, inherent limitations, and the nature of the organization. Quality of audit does not determine the amount of evidence needed.

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Q183

Inspection of tangible assets is a good example of the following assertion for obtaining audit evidence:

A) Existence
B) Presence
C) Occurrence
D) Subsistence

AI Explanation

Inspection of tangible assets provides evidence that the assets recorded in the financial statements actually exist. It is a common audit procedure for testing the existence assertion.

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Q184

Appropriateness refers to the quality of audit evidence. For evidence to be appropriate, it should integrate which one of the followings?

A) Relevancy and reliability
B) Materiality
C) Documented in the audit working papers
D) Received only from a third party

AI Explanation

Appropriateness of audit evidence refers to its quality, which is determined by relevance and reliability. Evidence must support the audit objective and be trustworthy to be considered appropriate.

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Q185

Audit evidence in the form of facts which do not need any further guesswork or reasoning is called:

A) Direct evidence
B) Indirect evidence
C) Secondary evidence
D) None of the given options

AI Explanation

Direct evidence consists of facts that do not require interpretation, assumptions, or further reasoning. It provides clear and immediate support for audit conclusions.

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Q186

For financial statements closing process, auditor’s substantive procedure should include the following procedures EXCEPT:

A) Agreeing to underlying accounting records
B) Examining material journal entries
C) Examining the adjustments made while preparing of financial statements
D) Examining the documental proof of each transaction while recording

AI Explanation

Substantive procedures for the financial statement closing process include agreeing records, examining journal entries, and reviewing adjustments. Examining documentary proof of every transaction is not a specific closing process procedure.

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Q187

Which of the following is TRUE for audit evidence?

A) It is the information to form an opinion on financial statements
B) It is the information to form an opinion on audit statements
C) It is the information to form an opinion on marketing statements
D) It is the information to form an opinion on management statements

AI Explanation

Audit evidence is the information used by auditors to draw conclusions and form an opinion on financial statements. It supports the auditor's assessment of whether statements are fairly presented.

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Q188

Substantive procedures are tests which are undertaken to obtain which one of the followings?

A) Audit opinion
B) Audit appointment
C) Audit evidence
D) Reasonable assurance

AI Explanation

Substantive procedures are performed by auditors to obtain sufficient appropriate audit evidence about transactions, account balances, and disclosures. This evidence helps support the auditor's conclusions.

ACC311 Final Term AI Solved

Q189

Documentary evidence is used extensively in auditing. Which one of the following represents two special classes of documentary evidence?

A) Confirmations and oral representations
B) Oral and written representations
C) Confirmations and oral representations
D) Confirmations and written representations

AI Explanation

Confirmations and written representations are special classes of documentary evidence used in auditing. They provide documented support obtained from external parties or management.

ACC311 Final Term AI Solved

Q190

For better results, Auditor focused on designing the question while ICQ constructions. Questions should be designed to fulfill the following objectives EXCEPT:

A) It ensures about the validity of information obtaining in response
B) It ensure whether the control objectives are being achieved or not
C) It ensures the management participation in ICQ constructions
D) It ensures that the all aspects were covered

AI Explanation

ICQ questions are designed to evaluate control objectives, cover all relevant areas, and ensure reliable information is obtained. Management participation is not a primary objective of ICQ construction.

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Q191

Test of controls comprise of testing all of the following three things EXCEPT:

A) Design
B) Operating efficiency
C) Implementation
D) Operating effectiveness

AI Explanation

Tests of controls evaluate the design, implementation, and operating effectiveness of controls. Operating efficiency relates to performance and is not a control testing objective.

ACC311 Final Term AI Solved

Q192

Auditor is able to apply tests of control procedure if following condition are fulfilled EXCEPT:

A) None of the given options
B) When sufficient appropriate audit evidence can’t be obtained at assertion level by substantive procedures alone
C) When sound internal control exists in the organization
D) Only applied after application of test of details procedure

AI Explanation

Tests of controls are not necessarily applied after tests of details; they are usually performed when auditors plan to rely on internal controls. They may be used when effective controls exist or when substantive procedures alone are insufficient.

ACC311 Final Term AI Solved

Q193

Highlight the factor which has NO effects on quality of Confirmations made by an auditor if he ignores it:

A) Debtors & creditors
B) Banks
C) Legal advisors
D) Previous auditor

AI Explanation

Confirmations are typically obtained from external parties such as debtors, creditors, banks, and legal advisors. The previous auditor does not directly affect the quality of current audit confirmations.

ACC311 Final Term AI Solved

Q194

Which one of the following primary assertions is satisfied when an auditor observes the client's physical count of inventory?

A) Valuation
B) Rights and obligations
C) Existence
D) Completeness

AI Explanation

Observing the physical count of inventory provides evidence that the inventory actually exists. It is primarily used to test the existence assertion.

ACC311 Final Term AI Solved

Q195

Test of control is a brief method to obtain the audit evidence. It comprises of three things such as:

A) Design, implement & Checked the Operating efficiency
B) Design, implement & Checked the Operating effectiveness
C) Design, implement & Analyze the results
D) Design, implement & get results

AI Explanation

Tests of controls involve evaluating whether controls are properly designed, implemented, and operating effectively. This helps auditors determine whether reliance can be placed on the internal control system.

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Q196

Which one of the following audit procedures is most associated with the management’s assertion of ‘Completeness’?

A) Reviewing the outstanding cheques listing
B) Checking that the accounts receivable aged trial balance adds up
C) Searching for all unmatched receiving reports
D) Confirming an accounts receivable balance with a customer

AI Explanation

Searching for unmatched receiving reports helps identify goods received that may not have been recorded as purchases or liabilities. This directly addresses the completeness assertion.

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Q197

Audit quality refers to the following statements EXCEPT:

A) Resisting management pressures
B) Discharging responsibilities with due professional care
C) Collecting sufficient audit evidence
D) Having adequate competence

AI Explanation

Collecting sufficient audit evidence is an audit requirement rather than a direct characteristic of audit quality. Audit quality is more related to competence, professional care, and independence.

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Q198

Certain assertions were used while obtaining the audit evidence. “Cutoff” is an important type of assertion used in above mention process, which statement best described the “cutoff” assertion?

A) Transactions and events have been recorded in proper period
B) All transactions have been recorded
C) Transactions and events have been recorded in proper accounts
D) Appropriate amount and data have been recorded

AI Explanation

The cutoff assertion ensures that transactions and events are recorded in the correct accounting period. It prevents transactions from being recorded too early or too late.

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Q199

SOFs are special types of forms used in internal control questionnaire (ICQ) process. These form basically named as:

A) Standard (Acquiring services) Order Forms
B) Standard (Sales) Order Forms
C) Standard (Offering services) Order Forms
D) Standard (Purchase) Order Forms

AI Explanation

SOFs in the context of internal control questionnaires refer to Standard Purchase Order Forms. These forms are used to control and document purchasing activities.