MCQ Bank

Asset verification commonly involves procedures such as vouching, reviewing representation letters, and checking insurance coverage. Taxation is generally not a direct matter related to verification of assets.

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Q87

Which one from the following is an example of designing control procedure for achieving control objectives?

A) List all the orders in a transaction cycle & generate appropriate test of skills
B) List all the invoices in a transaction cycle & generate appropriate test of details
C) List all the returns in a transaction cycle & generate appropriate evidence for their existence
D) List all the documents in a transaction cycle & generate appropriate test of controls

AI Explanation

An example of designing control procedures is identifying documents involved in a transaction cycle and developing tests of controls to assess their effectiveness. This helps auditors evaluate whether internal controls are properly operating.

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Q88

What the auditor should perceive about a situation when management refuses to provide necessary representations?

A) For auditor, it constitutes a scope limitation
B) The auditor should try to obtain alternative audit evidence
C) The auditor should resign from the management
D) For auditor, this situation could lead to give qualified opinion

AI Explanation

If management refuses to provide necessary representations, the auditor may be unable to obtain sufficient appropriate audit evidence. This is considered a limitation on the scope of the audit.

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Q89

Which of the following element is NOT considerd while preparing payslip of any worker?

A) Tax paid
B) Details of expected pension
C) Deductions paid
D) Gross wages

AI Explanation

A payslip normally includes gross wages, deductions, and taxes paid. Details of expected pension are not usually included as a basic element of a worker's payslip.

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Q90

While verifying the assets of a company, auditors may examine documentation, verify reasonableness of the proceeds, pay special attention to scrapings, and note accounting treatment. It refers to which one of the following scheduling methods of assets?

A) Ownership
B) Existence
C) Acquisitions
D) Disposals

AI Explanation

The procedures described involve checking proceeds from asset sales, scrap values, and accounting treatment, which are related to the disposal of assets. Auditors verify that disposals are properly authorized and recorded.

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Q91

The sales ledger personal should not have access to the receipts before maintaining of record. This method is used to applied;

A) Control procedures on payments
B) Control procedures on receipts
C) Control procedures on documents & records
D) Control procedures on cash

AI Explanation

Restricting sales ledger personnel from accessing receipts before records are maintained is a control over cash receipts. It helps prevent unauthorized alteration or misappropriation of incoming payments.

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Q92

“Take home pay” of a worker consists of which of the followings:

A) Gross pay minus benefits received
B) Gross pay
C) Gross pay plus benefits received
D) Gross pay minus deduction made

AI Explanation

Take-home pay is the amount an employee receives after deductions such as taxes and other authorized deductions are subtracted from gross pay. It represents the net amount paid to the worker.

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Q93

Compensating balance of cash can be easily described with the help of following statement;

A) Carry forward amount of deposit
B) Amount that is used to maintain service charges by bank from deposit
C) Amount that is required for opening a new account in the bank
D) Amount that must be left on deposit and cannot be withdrawn

AI Explanation

A compensating balance is a minimum balance that a borrower or account holder must maintain in a bank account. It cannot be withdrawn freely and is often required as part of banking arrangements.

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Q94

Which one of the following is an appropriate evidence for verifying the existence of inventory?

A) Observing the counting of inventory
B) Identifying the slow-moving inventory
C) Obtaining a letter of representation from the management of the entity about it
D) Checking valuation of that inventory

AI Explanation

Observing the physical inventory count provides direct audit evidence about the existence of inventory. It allows auditors to verify that recorded inventory is physically present.

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Q95

Law says that the general ledger account of petty cash will remain dormant at a set amount. It means that the custodian should maintain the petty cash balance equal to opening balance. This theory is named as;

A) Imprest system
B) Petty cash system
C) Explicit system
D) Control system

AI Explanation

The imprest system maintains petty cash at a fixed amount, with reimbursements made to restore the balance to its original level. The petty cash ledger therefore remains at a predetermined balance.

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Q96

“Grid stamp” is a term which is used to describe that:

A) Several signature by different authorities present on the face of document
B) Specific authority has checked the accuracy of document itself
C) All calculation were rechecked again
D) Nominee of specific authority checked the accuracy of document

AI Explanation

A grid stamp indicates that a document has been reviewed and approved by multiple authorized individuals. It provides evidence of checks and authorization procedures.

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Q97

Following are usual methods of recording workers attendance EXCEPT:

A) Technical method
B) Manual method
C) Mechanical method
D) Electronic method

AI Explanation

Common methods of recording attendance include manual, mechanical, and electronic methods. Technical method is not generally recognized as a standard attendance recording method.

ACC311 Final Term AI Solved

Q98

Which one of the following best describes the auditors’ aim of testing a sales system of a company?

A) It is aimed at providing guidance for sales strategies and its management
B) It is aimed at providing effective guidance for conducting the audit of Sales
C) It is aimed at providing guidance for meeting the sales target
D) It is aimed at providing guidance for conducting the sales audit according to the management view of the company

AI Explanation

Testing a sales system helps auditors evaluate controls and procedures related to sales transactions. Its purpose is to support an effective and properly planned sales audit, not to guide sales management strategies.

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Q99

An input VAT tax should be recorded in the following manner

A) Included in sales tax paid
B) Included in expenses
C) Recorded separately from the expense element of invoice total
D) Recorded separately from the ledger

AI Explanation

Input VAT should be separately identified from the expense or purchase amount because it is recoverable tax. Separating it ensures accurate accounting and tax reporting.

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Q100

While testing the purchase system of an entity, which one of the following control tests may be applied to the Credit Notes by the auditors?

A) Evidence of a sequence check
B) Evidence of approval of credit notes
C) Proof of issuance date
D) Evidence of matching credit notes to goods returned notes

AI Explanation

In a purchase system, auditors test credit notes by ensuring they are supported by valid goods returned notes. This confirms that credits issued are properly authorized and related to actual returns.

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Q101

Which one of the following is TRUE about Auditing requirements for transparency of the sales system of a company?

A) The Copies of cancelled invoices should be retained by the companies
B) The Copies of cancelled invoices should be kept in electronic records
C) The Copies of cancelled invoices should be given to the suppliers also
D) The Copies of cancelled invoices is not required to be retained by the companies

AI Explanation

Cancelled invoices should be retained to maintain a complete audit trail and support the sequence of sales documentation. This helps auditors verify that cancelled transactions are properly controlled.

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Q102

Purchase invoices should be matched with which one of the followings?

A) Copies of purchase invoice
B) Purchase register and ledger entries
C) Goods received notes and company orders
D) Requisition notes

AI Explanation

Purchase invoices are matched with goods received notes and purchase orders to confirm that goods were ordered, received, and correctly invoiced. This is an important control in the purchase cycle.

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Q103

How unused cheques should be handled in order to exercise effective internal control?

A) Should be discarded immediately
B) Should be sent to the central bank
C) Should be held in a secure place
D) Should be sent to the clearing agency

AI Explanation

Unused cheques should be safeguarded in a secure location to prevent unauthorized use or fraud. Proper control over cheque stationery is an important part of cash control procedures.

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Q104

Which one from the following is NOT included in the category of cash?

A) Deposit with banks
B) Postdated checks
C) Money orders
D) Checks

AI Explanation

Postdated checks are not considered cash because they cannot be deposited or used until the future date written on them. Cash generally includes bank deposits, money orders, and valid checks available for immediate use.

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Q105

Determining the sufficiency of the appropriate audit evidence is based upon which one of the following?

A) Upon the client’s judgment
B) Upon the auditing standard - 8
C) Upon the auditor’s judgment
D) Upon the auditor’s qualification

AI Explanation

The sufficiency of audit evidence depends on the auditor's professional judgment based on assessed risks, materiality, and the reliability of evidence. Auditing standards provide guidance, but the final assessment is made by the auditor.