MCQ Bank

Salary cheques generally require authorization by two signatories to provide proper control and reduce the risk of unauthorized payments. This creates a system of independent approval.

ACC311 Final Term AI Solved

Q107

Test of controls over inventory systems may include the following EXCEPT:

A) Assess adequacy of inventory counting procedures and attend count to ensure they are carried out
B) Check sequences of dispatch and goods received notes for completeness
C) Observe physical security of inventories and environment in which they are held
D) Count physical inventory daily and check inventory stock outs

AI Explanation

Testing inventory controls involves evaluating counting procedures, document sequences, and physical security. Daily physical counting of inventory and checking stock outs is not a normal control test procedure.

ACC311 Final Term AI Solved

Q108

Employer total cost for wages and salaries consists of:

A) Total wages & Total salaries plus Employer’s provident contribution
B) Gross wages & Gross salaries plus Employer’s provident contribution
C) Gross wages & Gross salaries
D) Total wages & Total salaries

AI Explanation

Employer total cost includes the gross wages and salaries paid to employees along with additional employer contributions such as provident fund contributions. It represents the complete employment cost to the organization.

ACC311 Final Term AI Solved

Q109

Those items which are easily acceptable to a bank for deposits and are free from restrictions is(are):

A) Undeposited checks
B) Bank deposits certificates
C) Checks
D) Cash

AI Explanation

Cash consists of items that are readily acceptable by banks, available for immediate use, and free from restrictions. Other items such as certificates or undeposited checks may have limitations.

ACC311 Final Term AI Solved

Q110

When should cash payments receipts of each day be recorded?

A) Should be recorded next day in the cash book
B) Should be recorded monthly in the cash book
C) Should be recorded promptly in the cash book
D) Should not be recorded in the cash book

AI Explanation

Cash receipts should be recorded immediately or promptly to maintain accurate records and reduce the risk of errors or misappropriation. Delayed recording weakens cash controls.

ACC311 Final Term AI Solved

Q111

Which one of the following is the most important area of the businesses which requires development of a large number of controls?

A) Purchase system in order to
B) Cash system
C) Pay roll system
D) Sales system

AI Explanation

The cash system requires extensive controls because cash is highly liquid and vulnerable to theft or misuse. Strong procedures are needed for authorization, recording, and safeguarding cash.

ACC311 Final Term AI Solved

Q112

In auditing, verification of equity refers to which one of the following?

A) All of the given options
B) Reserves are properly classified and presented
C) To confirm the movements in reserves are properly authorized
D) Share capital is properly classified and described in the accounts

AI Explanation

Verification of equity includes checking share capital classification, authorization of reserve movements, and proper presentation of reserves. All listed areas are relevant parts of equity verification.

ACC311 Final Term AI Solved

Q113

When should the petty cash book entries be made for keeping effective control?

A) Next day
B) Monthly
C) At the day end
D) Promptly

AI Explanation

Petty cash book entries should be made promptly to maintain accurate records and effective control over small cash transactions. Delayed recording increases the risk of errors and misuse of petty cash.

ACC311 Final Term AI Solved

Q114

Which one of the following may NOT consist of any asset verification methods?

A) Acquisitions
B) Disposals
C) Reconciliation
D) Closing balance

AI Explanation

Asset verification methods commonly include acquisitions, disposals, and checking closing balances. Reconciliation is an audit procedure but is not generally categorized as an asset verification method.

ACC311 Final Term AI Solved

Q115

Which control objective from the followings has least importance for controlling the cash system?

A) Control over petty cash
B) Bank invoices
C) Bank reconciliations
D) Control over cash sales

AI Explanation

Bank invoices are not a major control objective for managing the cash system. Controls over petty cash, bank reconciliations, and cash sales are more directly related to cash control.

ACC311 Final Term AI Solved

Q116

Statements from suppliers should be checked against which of the following accounts?

A) Ledger
B) Supplies
C) Disbursements
D) Expense

AI Explanation

Supplier statements are checked against ledger accounts to verify that recorded balances agree with supplier records. This helps identify missing invoices, errors, or unrecorded liabilities.

ACC311 Final Term AI Solved

Q117

When auditor obtains management’s representation about the cost of an asset acquired, he should:

A) Accept it as final evidence
B) Disclose the fact of having received the management’s representation in his report
C) Seek evidence of such cost which is ordinarily available
D) Disclose the fact of having received management’s representation in the financial statements

AI Explanation

Management representations alone are not sufficient evidence for verifying asset costs. Auditors should obtain supporting documentation such as invoices, contracts, or other available evidence.

ACC311 Final Term AI Solved

Q118

Petty cash book should be maintained by which one of the following personnel?

A) Teller
B) Petty cashier
C) Accountant
D) Operations manager

AI Explanation

The petty cash book should be maintained by the petty cashier, who is responsible for recording and controlling small cash transactions. This separation helps maintain accountability and reduces the risk of misuse.

ACC311 Final Term AI Solved

Q119

Auditing Standards require that all cheques and postal orders should be restrictively crossed for the control purposes. According to your knowledge, this control procedure explains which one of the following statements?

A) Can be presented on the cash counter
B) Account payee only, not negotiable
C) Account payee only, and negotiable
D) Cheque may not be paid for a specific time period

AI Explanation

Restrictive crossing ensures that cheques and postal orders can only be deposited into the account of the named payee and cannot be transferred by negotiation. This provides stronger control over cash receipts.

ACC311 Final Term AI Solved

Q120

According to the requirements of auditing standards, total inventory records should be maintained and integrated with which one of the following?

A) Financial statements
B) Accounting department
C) Control account system file
D) Main accounting system

AI Explanation

Inventory records should be integrated with the main accounting system to ensure accurate recording and reporting of inventory balances. This supports effective control and financial statement preparation.

ACC311 Final Term AI Solved

Q121

How often Inventory levels should be checked against the inventory records in order to verify internal control effectiveness?

A) Daily
B) Rarely
C) Periodically
D) Never

AI Explanation

Inventory levels should be checked periodically against inventory records to verify that records are accurate and controls are operating effectively. The frequency depends on the nature and risk of the inventory system.

ACC311 Final Term AI Solved

Q122

which one of the following ways the record of cheques and cash received may be kept?

A) Cash registers
B) Copies of Cash notes
C) Computer database
D) Rough cash book

AI Explanation

Cash registers provide a systematic method for recording cash and cheque receipts at the point of transaction. They help maintain accurate records and strengthen cash handling controls.

ACC311 Final Term AI Solved

Q123

Auditor has a duty to verify all the assets appearing on the balance sheet. Which aspects they must verify about the assets out of the followings stated?

A) Nature of assets
B) Depreciation of assets
C) Cost, authorization and value
D) Classification of assets

AI Explanation

Auditors verify assets by checking important aspects such as their cost, proper authorization, and valuation. These procedures help ensure that assets are correctly recorded and fairly presented in the financial statements.

ACC311 Final Term AI Solved

Q124

Which one of the following may NOT be the control procedure at key stages of the purchase cycle?

A) Receipt of goods
B) Invoicing and credit notes
C) Invoicing and returns
D) Purchase ledger and suppliers

AI Explanation

Key stages of the purchase cycle include receipt of goods, invoicing and credit notes, and purchase ledger with suppliers. Invoicing and returns is not normally considered a separate key control stage.

ACC311 Final Term AI Solved

Q125

GRN (Goods Recieved No)should be checked against which of the following document?

A) Purchase Order
B) Sales Order
C) Invoice received
D) Purchase requisition

AI Explanation

A Goods Received Note (GRN) is checked against the purchase order to confirm that goods received match what was ordered. This helps verify authorization, quantity, and accuracy of purchases.