MCQ Bank

Goods returned notes are controlled documents and auditors may check their numerical sequence to ensure completeness and proper recording. Sequence checks help identify missing or unauthorized documents.

ACC311 Final Term AI Solved

Q147

According to the requirements of International Auditing Standards (ISAs), the authority to write off a bad debt should be in which form?

A) Verbal
B) Using a legal paper
C) Photo copied
D) Written

AI Explanation

According to auditing requirements, authorization to write off bad debts should be documented in writing. Written approval provides reliable evidence that the write-off was properly authorized.

ACC311 Final Term AI Solved

Q148

For getting strong control over cash system salesmen and other personals are required to remit cash and report sales at:

A) Regular intervals
B) The end of month
C) The end of sales target achieved
D) The end of fulfills the order by customer

AI Explanation

For strong cash control, salesmen and other personnel should remit cash and report sales at regular intervals. Frequent reporting reduces the risk of cash misappropriation and improves monitoring.

ACC311 Final Term AI Solved

Q149

Types of control procedures over purchases and payables include the following EXCEPT:

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

AI Explanation

Dispatch of goods is related to the sales cycle rather than the purchases and payables cycle. Purchase and payable controls include receipt of goods, invoicing, returns, and supplier ledger procedures.

ACC311 Final Term AI Solved

Q150

Which of the following should be done with the copies of cancelled invoices in sales system?

A) Should be dispatched to the customers
B) Should be discarded
C) Should be retained
D) Should be dispatched to the suppliers

AI Explanation

Cancelled invoices should be retained to maintain a complete audit trail and provide evidence of sales documentation. Discarding them could weaken internal controls and audit verification.

ACC311 Final Term AI Solved

Q151

Which one of the following control tests may be applied by the auditors to the Payables Ledgers Control Account while testing the purchase system of an entity?

A) Evidence of authorization of adjustments to payables ledger
B) Evidence of authorization of controlling transactions
C) Evidence of authorization of preparing payable ledger entries
D) Evidence of authorization of adjustments to purchase ledger control account

AI Explanation

Auditors test payables ledger control accounts by checking that adjustments are properly authorized. This ensures changes to supplier balances are valid and approved.

ACC311 Final Term AI Solved

Q152

For maintaining strong inventory control many procedures were adopted. Highlight the procedure which is NOT valid for maintaining strong inventory control;

A) Control over goods inwards
B) Control over goods outwards
C) Control over inventory level
D) Control over the person who counts the inventory daily

AI Explanation

Strong inventory control focuses on goods inwards, goods outwards, and inventory levels. Controlling the person who counts inventory daily is not a standard inventory control procedure and is impractical as a primary control.

ACC311 Final Term AI Solved

Q153

Pay slip of an employee could also show some additional information such as:

A) All of them
B) Employee’s social security number
C) Employee’s National tax number
D) Employee’s payroll number

AI Explanation

An employee payslip may include additional identifying information such as social security number, national tax number, and payroll number. These details help ensure accurate payroll processing and record keeping.

ACC311 Final Term AI Solved

Q154

When it is more reliable to perform substantive procedures?

A) Monthly
B) Weekly
C) Year end
D) Bi-monthly

AI Explanation

Substantive procedures are generally more reliable when performed at year end because they directly relate to the final balances and transactions reported in financial statements. This reduces the risk of changes occurring after testing.

ACC311 Final Term AI Solved

Q155

Copies of Purchase order should be retained by the company with the purpose:

A) To ensure that goods has been properly received
B) To ensure the “follow up method” in case of late deliveries
C) Of setting the re-order level
D) Of evidence used for sales cycle

AI Explanation

Retaining copies of purchase orders allows the company to monitor outstanding orders and follow up with suppliers when deliveries are delayed. It also supports proper purchasing control.

ACC311 Final Term AI Solved

Q156

The letter of representation should be signed by which one of the following authorities?

A) Chief executive
B) Finance manager
C) Chartered accountants
D) Accounts manager

AI Explanation

The letter of representation is normally signed by senior management, such as the chief executive, who has overall responsibility for the financial statements and representations provided to auditors.

ACC311 Final Term AI Solved

Q157

How often the Bank reconciliations should be prepared?

A) On a regular basis, at least monthly
B) On a regular basis, at least weekly
C) On annual basis
D) On an interim basis, at least after four months

AI Explanation

Bank reconciliations should be prepared regularly, at least monthly, to identify errors, omissions, or unauthorized transactions promptly. Frequent reconciliation strengthens cash controls.

ACC311 Final Term AI Solved

Q158

Which of the following is an integral part of audit at the stage of checking and evaluation of information?

A) Final report
B) Internal control questionnaire
C) Plan of the audit task
D) None of the given options

AI Explanation

The internal control questionnaire is an integral audit tool used during the checking and evaluation stage to assess the effectiveness of internal controls. It helps auditors gather and evaluate information about the control system.

ACC311 Final Term AI Solved

Q159

If an auditor perform a process such as “compares the production cost with previous month’s cost” than this process is called as;

A) Test of details
B) Test of control
C) Walk through tests
D) Analytical procedures

AI Explanation

Comparing production costs with previous months' costs is an analytical procedure because it involves evaluating trends and relationships in financial information. It helps identify unusual changes requiring further investigation.

ACC311 Final Term AI Solved

Q160

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

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

AI Explanation

The study of economic operations involves examining the legitimacy, usefulness, and reliability of business transactions. It helps auditors understand and evaluate organizational activities.

ACC311 Final Term AI Solved

Q161

Inappropriate audit approaches lead towards misunderstanding of internal control systems. The best example for an inappropriate audit approach is;

A) Apply the tests of controls only after occurring of event
B) Apply substantive procedures only for a particular assertion may be because auditor failed to identify any effective control
C) Combined approach (applying both tests of operating effectiveness of control’s and substantive procedures for same assertion
D) Apply tests of control only for a particular assertion

AI Explanation

Using substantive procedures alone without properly assessing controls may indicate an inappropriate audit approach if effective controls exist. Auditors should design procedures based on risk assessment and control evaluation.

ACC311 Final Term AI Solved

Q162

Existence of purchasing department entertain the auditor in following manner:

A) Give awareness to auditor about nature of goods purchased
B) Give awareness about entity’s minimum and maximum re-order level to ensure efficient control
C) All of the given options
D) Give awareness whether ordering is centralized or not

AI Explanation

The purchasing department provides auditors with information about purchased goods, re-order levels, and whether purchasing is centralized. All these factors help auditors understand and evaluate the purchase system.

ACC311 Final Term AI Solved

Q163

Tests of controls include all of the following EXCEPT:

A) Walk-through procedures
B) Observation
C) Analytical procedures
D) Inspection of documents, files, etc.

AI Explanation

Tests of controls generally include walkthrough procedures, observation, and inspection of documents to evaluate whether controls are operating effectively. Analytical procedures are mainly used as substantive audit procedures rather than tests of controls.

ACC311 Final Term AI Solved

Q164

‘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 when audit procedures are performed or the period or date to which the audit evidence applies
C) It refers to the nature of testing and their procedures, that is, designing, structuring, and compiling work to be done
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 when audit work is carried out and the period covered by the evidence obtained. It helps determine whether evidence is appropriate for the audit objective.

ACC311 Final Term AI Solved

Q165

Test of details is also called as:

A) Substantive test
B) Compliance test
C) Test of skills
D) Test of control

AI Explanation

Test of details is a type of substantive test used to verify transactions, account balances, and disclosures directly. It provides evidence about the accuracy and completeness of financial information.