MCQ Bank

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

AI Explanation

A good ICQ generally includes Yes/No questions and space for comments when Yes/No answers are not sufficient. It does not consist only of open-ended questions and does not require all respondents to be properly literate.

ACC311 Final Term AI Solved

Q201

Audit evidence, including information received from the audited entity in writing or oral is called:

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

AI Explanation

Information received from the audited entity, whether in written or oral form, is considered internal audit evidence. It originates within the organization being audited.

ACC311 Final Term AI Solved

Q202

Sound internal control helped out the auditor to entertain some relaxation, such as:

A) Helped the auditor to check available records
B) Reduces the volume of transactions testing required in conducting an audit
C) Helped the auditor to express his opinion at the end of audit process
D) All of the given options

AI Explanation

A strong internal control system allows auditors to place reliance on controls and reduce the extent of substantive testing. It helps improve audit efficiency while maintaining assurance.

ACC311 Final Term AI Solved

Q203

Which one of the following is an alternative name for ‘Test of controls’?

A) Substantive tests
B) Analytical procedures
C) Control procedures
D) Compliance tests

AI Explanation

Tests of controls are also known as compliance tests because they evaluate whether prescribed internal controls are being followed. They help auditors determine the effectiveness of the control system.

ACC311 Final Term AI Solved

Q204

For ensuring the quality of Internal Control Questionnaire (ICQ), Auditor includes some reference in this respect. Highlight the reference which is NOT suitable to be included in ICQ;

A) None of the given options
B) Reference to Management Letter
C) Reference to Engagement Letter
D) Reference to Audit Program

AI Explanation

An ICQ may include references to the management letter and audit program for control evaluation purposes. The engagement letter is related to the agreement between auditor and client and is not a suitable ICQ reference.

ACC311 Final Term AI Solved

Q205

Verification of debtors’ balances includes which of the following?

A) Verify debts with reference to cash received since year-end
B) Verify nature, amount and classification of credit balance
C) Check accuracy and completeness of debtors' listing
D) All of the given options

AI Explanation

Verification of debtors’ balances includes checking subsequent cash receipts, reviewing credit balances, and ensuring the accuracy and completeness of debtor listings. All these procedures help validate receivables.

ACC311 Final Term AI Solved

Q206

Which of the following points may NOT be considered during verification of debtors’ balances?

A) Check accuracy and completeness of debtors' listing
B) Verify nature, amount and classification of credit balance
C) Check credit note cut-off, if material
D) Obtain confirmation from creditors

AI Explanation

Debtors’ balances are verified through procedures related to customers, not creditors. Obtaining confirmation from creditors is related to liabilities and payables.

ACC311 Final Term AI Solved

Q207

A building company constructs its own office block. How the company should identify this asset in the costing records?

A) Record the asset with intangible fixed assets
B) Record the asset separately in costing records
C) Record the asset in separately in liabilities
D) Record the asset in capital investments

AI Explanation

A self-constructed office building is a non-current asset and should be separately identified in costing records to track its cost and details. It is not recorded as an intangible asset, liability, or capital investment.

ACC311 Final Term AI Solved

Q208

Letter of confirmation may include the following information EXCEPT:

A) Full title of account and balances thereon
B) Interest charged during the period
C) Accounts opened during the period
D) Details of security and charges

AI Explanation

A bank confirmation letter may include account titles, balances, interest charged, and details of securities or charges. Information about accounts opened during the period is not typically included as a standard confirmation requirement.

ACC311 Final Term AI Solved

Q209

Which one of the following best describes the purpose of letter of confirmation from the bank?

A) To check the bank balances in order to finally give true and fair view
B) To check the bank balances in order to ensure the financial health of the company
C) To confirm the bank balances and other matters before the audit process start in a company
D) To confirm the bank balances and other matters to the auditor directly

AI Explanation

The purpose of a bank confirmation is to provide reliable external evidence directly to the auditor from the bank. This helps verify balances and other relevant banking matters independently.