MCQ Bank

The nature of audit procedures refers to their purpose and type, such as inspection, observation, confirmation, or analytical procedures. Duration and features are not components of the nature of audit procedures.

ACC311 Final Term AI Solved

Q41

Audit quality refers to the following statements EXCEPT:

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

AI Explanation

Collecting sufficient audit evidence is an audit procedure requirement rather than a direct definition of audit quality. Audit quality focuses on competence, due professional care, and professional independence.

ACC311 Final Term AI Solved

Q42

Which of the following is TRUE for audit evidence?

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

AI Explanation

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

ACC311 Final Term AI Solved

Q43

‘Timing of audit procedure’ refers to which one of the following descriptions?

A) It refers to sample size or number of observations of a control activity (quantity of audit evidence)
B) It refers to the nature of testing and their procedures, that is, designing, structuring, and compiling work to be done
C) It refers to when audit procedures are performed or the period or date to which the audit evidence applies
D) 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

AI Explanation

Timing of audit procedures relates to the period in which audit work is performed and when evidence is obtained. It also considers the date or period covered by the audit evidence.

ACC311 Final Term AI Solved

Q44

The quantity of audit evidence needed is NOT effected by:

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

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 itself is not a factor that determines the amount of evidence needed.

ACC311 Final Term AI Solved

Q45

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

AI Explanation

The cutoff assertion ensures that transactions and events are recorded in the correct accounting period. It prevents transactions from being shifted between periods to misstate financial results.

ACC311 Final Term AI Solved

Q46

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

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

AI Explanation

Tests of controls involve evaluating whether controls are properly designed, implemented, and operating effectively. This allows auditors to determine whether they can rely on the internal control system.

ACC311 Final Term AI Solved

Q47

The process of studying the legitimacy, usefulness and reliability of business transactions is:

A) Collection of audit evidence
B) Examination of violations found in operations
C) Study of economic operations
D) Formulation of audit categories

AI Explanation

The study of economic operations involves evaluating the legitimacy, usefulness, and reliability of business transactions. It helps auditors understand and assess the organization's activities.

ACC311 Final Term AI Solved

Q48

Appropriateness of the audit evidence refers to the quality of audit evidence that imply to which one of the following statements?

A) Relevance and reliability of audit evidence gathered
B) Inconsistency and flexibility of audit evidence gathered
C) Formulation and structure of audit evidence gathered
D) Consequence and implication of audit evidence gathered

AI Explanation

Appropriateness of audit evidence refers to the quality of evidence, which is determined by its relevance and reliability. High-quality evidence helps auditors reach valid conclusions.

ACC311 Final Term AI Solved

Q49

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

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

AI Explanation

Information received from third parties in writing is considered external audit evidence. It is generally more reliable because it comes from an independent source outside the organization.

ACC311 Final Term AI Solved

Q50

An auditor of a large telecom company gathers audit evidence to determine if specific management assertions are being met. He should perform the specific facts as follows EXCEPT:

A) Incorporate risk assessment procedures
B) Conducts tests of controls
C) Perform substantives procedures
D) Develop strategies for operational effectiveness

AI Explanation

Auditors gather evidence through risk assessment procedures, tests of controls, and substantive procedures to evaluate financial statement assertions. Developing strategies for operational effectiveness is a management activity, not an audit evidence procedure.

ACC311 Final Term AI Solved

Q51

While inspecting the purchase cycle of a company the auditor focuses to obtain the following objectives EXCEPT:

A) Goods received should be properly inspected
B) Purchase order issued under proper authority and procedures
C) Purchase orders only issues for such quantity which is necessary for the conducting of business operations
D) All transaction related to receivables should be properly recorded

AI Explanation

The purchase cycle relates to purchasing activities, receiving goods, and authorization of purchases. Recording receivables is part of the sales and collection cycle, not the purchase cycle.

ACC311 Final Term AI Solved

Q52

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

AI Explanation

Internal Control Questionnaire (ICQ) questions are designed to assess control objectives, cover relevant areas, and validate information obtained. Ensuring management participation is not a primary objective of ICQ construction.

ACC311 Final Term AI Solved

Q53

If we talk about timings of substantive procedures. Which statement seems to be true?

A) Substantive procedure are more reliable if applied at the end of year
B) Substantive procedure are more reliable if applied frequently during the year
C) Substantive procedure are more reliable if applied after specific intervals in a year at least 2 times
D) Substantive procedure are more reliable if applied at start of the year

AI Explanation

Substantive procedures are generally more reliable when performed at or near the end of the reporting period because they directly test year-end balances and transactions. This reduces the risk of changes occurring between testing and the financial statement date.

ACC311 Final Term AI Solved

Q54

For better results an ICQ should carry basic information as:

I. Yes and No answer
II. Comments with Yes and No answer are not applicable
III. Consists of open ended questions only
IV. All respondents should properly literate

A) IV & I only
B) II & III only
C) III & IV only
D) I & II only

AI Explanation

An effective ICQ generally includes Yes/No answers along with comments or explanations where needed. It is not limited to open-ended questions, and respondent literacy is not considered a basic feature of ICQ design.

ACC311 Final Term AI Solved

Q55

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

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

AI Explanation

Inspection of tangible assets provides evidence that recorded assets actually exist. It helps auditors verify the existence assertion for physical assets.

ACC311 Final Term AI Solved

Q56

Audit evidence can be obtained through different audit procedures, following are some important audit procedures EXCEPT:

A) Test of skills
B) Test of details
C) Analytical procedures
D) Test of control

AI Explanation

Common audit procedures include tests of controls, tests of details, and analytical procedures. Test of skills is not a recognized audit evidence gathering procedure.

ACC311 Final Term AI Solved

Q57

Inquiries of warehouse personnel concerning possible obsolete or slow-moving inventories provide assurance about which one of the following management's assertions?

A) Existence
B) Completeness
C) Valuation
D) Presentation

AI Explanation

Inquiries about obsolete or slow-moving inventory help auditors assess whether inventory is properly valued. Such conditions may require adjustments due to reduced net realizable value.

ACC311 Final Term AI Solved

Q58

Which of the following risk/(s) can present at assertion level?

A) Material misstatement risk
B) All of the given options
C) Audit risk
D) Significant risk

AI Explanation

At the assertion level, auditors consider risks such as material misstatement risk, audit risk, and significant risk. These risks affect the assessment of financial statement assertions and the design of audit procedures.

ACC311 Final Term AI Solved

Q59

All of the following characteristics reflect the level of competence of audit evidence EXCEPT:

A) Reliability
B) Sufficiency
C) Relevance
D) Independence

AI Explanation

Competence of audit evidence relates to its quality, including reliability, relevance, and independence. Sufficiency refers to the quantity of evidence rather than its competence.