The Islamia University of Bahawalpur

Total Marks: 100 Department of Commerce, IUB Time Allowed: 2 hours

BS Commerce 4th Semester Auditing Principles Self Assessment Test

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Objective Part (40)

Various types of quality audits are.

A. Product

B. Process

C. Management (system)

D. All of above

When the auditor is an employee of the organization being audited (auditee), the audit is
classified as an quality audit.

A. Internal

B. External

C. Compliance

D. Both A & B

The most comprehensive type of audit is the system audit, which examines suitability and
effectiveness of the system as a whole.

A. Quantity

B. Quality

C. Preliminary

D. Sequential

Each of the three parties involved in an audit plays a role that contributes to its success.

A. The client, the auditor, and the audit

B. The client, the auditor, and the audit

C. The client, the moderator, and the auditee

D. The client, the auditor, and the auditee

An audit is usually conducted in three steps; (1) A pre-examination or opening meeting with the
auditee marks the beginning of the process. (2) involves a suitability audit of the documented
procedures against the selected reference standard.(3) the auditor examines in depth the
implementation of the quality system.

A. True

B. False

The audit final report should include, at a minimum, the following.

(choose the one NOT required).

A. Type of audit conducted

B. Characteristics of audit

C. Identification of involved parties. auditor, auditee, and third party

D Audit team members

The time required and costs involved in an external audit are much higher

as compared to internal audits.

A. True

B. False

Audit is a fact-finding process that compares actual results.

A. Specified standards

B. Expected results

C. Premature results

D. Preliminary results

When a transaction has not been recorded in the books of account either

wholly or partially such errors are called as.

A. Error of commission
B. Error of omission

C. Compensating error

D. Error of principle

Verification of the value of assets, liabilities, the balance of reserves, provision and the amount
of profit earned or loss suffered a firm is called.

A. Continuous audit

B. Balance sheet audit

C. Interim audit

D. Partial audit

Vouching of the balances of all incomes and expenses account is known as vouching of.

A. Personal ledger

B. Impersonal ledger

C. Cash

D. Sales

Preliminary expenses are the best example for.

A. Fictitious asset

B. Intangible asset

C. Wasting asset

D. Floating asset

Periodical audit is also called as.

A. Final audit

B. Interim audit

C. Balance sheet audit

D. Income statement audit

The auditor of a government company shall be appointed by.

A. The government company itself

B. The central government

C. The share holders

D. The debenture holders

The main object of the audit of the cash book may be.

A. To verify the assets and liabilities

B. To know that all receipts and payments have been properly recorded

C. To check the internal control system in business

D. To check the bank balance

One of the audit procedures to check the issue of share capital of the newly formed company is.

A. The memorandum of association and articles of association

B. The share transactions register

C. The issue of debenture

D. None of the above

The work of one clerk is automatically check by another clerk is called.

A. Internal control

B. Internal check

C. Internal audit

D. None of the above

Audit Programme is prepared by.

A. The auditor.

B. The client.

C. The audit assistants.

D. The auditor and his audit assistants.

Balance sheet audit included verification of.

A. assets

B. liabilities

C. income and expenditure accounts where appropriate

D. all of the above

Audit of transactions does not include.

A. propriety audit

B. efficiency cum performance audit

C. audit of receipts

D. audit of expenditure

Audit of banks is an example of.

A. Statutory audit

B. Balance sheet audit

C. Concurrent audit

D. All of the above

This kind of audit is conducted generally between two annual audit.

A. internal audit

B .interim audit

C. final audit

D. continuous audit

Before the work of audit is commenced, the auditor plan out the whole of audit work is called.

A. Audit plan

B. Audit note

C. Audit risk

D. Audit Programme

Voucher relates to.

A. Cash receipt

B. cash payment

C. Credit transaction.

D. all the above

Internal auditor is appointed by.

A .The management

B .The shareholders

C .The government

D. The statutory body

Confirmation of the court is necessary for.

A. Increasing the share capital

B. Reduction of share capital

C. conversion of shares into stock

D. Issue of new shares

Who among the following can be appointed as auditor of a company.

A. A partner or a director of the company

B. A person of unsound mind

C. Mr. Y who owes Rs. 500 to the company

D. Mr. Z the holder of C.A certificate.

The audit that is made compulsory under statute is called.

A. Statutory audit

B. Partial audit

C. Complete audit

D. Continuous audit

For which of the following, Audit is optional.

A. Trusts

B. Joint stock companies

C. Proprietorship concern

D. None of the above

The main object of an audit is.

A. Expression of opinion

B. Detection and Prevention of fraud and error

C. Both A. and B.

D. Depends on the type of audit.

Interim audit is performed before the end of the accounting period, normally by the.

A. Junior staff

B. senior staff

C. whole audit team

D. Board of directors

The outcome of an audit is a/an.

A. Certificate

B. Report

C. Income and expenses

D. Profit or loss

Final audit is performed.

A. after the year ends

B. near the year ends

C. after 9 months of the year

D. only if interim audit has problems

What type of standard is applied in the audit of historical financial information.

A. IFAs

B. ISAs

C. ISAEs

D. ISRSs

What type of standard is applied in assurance engagements other than audits or reviews of
historical financial information.

A. IFAs

B. ISAs

C. ISAEs

D. ISREs

What type of standard is applied on compilation engagements, engagements to apply agreed

upon procedures to information and other related services engagements.

A. ISRSs

B. ISREs

C. ISAEs

D. ISQCs

ISQCs is an abbreviation for.

A. International Standards on Quantity Control

B. International Standards on Quality Control

C. International Society for Quantity Control

D. International Society for Quality Control

What type of standard is applied in the audit of historical financial information.

A. IFAs

B. ISAs

C. ISAEs

D. ISRSs
IAASB is an abbreviation for.

A. International Accounting and Auditing Standards Board

B. International Accountants and Auditors Standards Board

C. International Auditing and Assurance Standards Board

D. International Accounting and Assurance Standards Board

Instruction of audit issued by controller and auditor general of Pakistan.

A .statutory audit

B. final audit

C. management audit

D. government audit

Subjective Part

Answer the following short questions: (25)

1. How would you describe the need of an audit?

2. Give the organizational chart of an audit firm.

3. What is internal audit?

4. What is audit Engagement letter?

5. What is internal check?

6. What is origin of audit?

7. What is continuous audit?

8. Distinction Errors and Frauds.

9. What is the importance of audit program?

10. What is the meaning of test checking?

11. What is the meaning of routine checking?

12. Briefly describe audit sampling.

Answer the following long questions: (15)

1. Distinguish between auditing and accounting.

2. What is audit program, also give its advantages.

3. Discuss advantages and disadvantages of test checking.