Practice Pakistan's most useful MCQs for competitive exams

Which of the following does NOT belong in the auditors’ report?

• (A)  Introductory paragraph specifying the pages to which the report relates and the accounting convention adopted
• (B)  Basis of the opinion
• (C)  Involvement of any specialist
• (D)  Statement of responsibilities of directors and auditors

Answer

Submitted By :Ali Uppal

Which one of the following is part of the auditor’s function?

• (A)  Conducting the inventory count
• (B)  Obtaining and evaluating audit evidence on the financial statements
• (C)  Calculating the year-end accruals figure for inclusion in the accounts
• (D)  Providing representations to management

Answer

Submitted By :Ali Uppal

What sort of assurance is provided in a review engagement?

• (A)  Positive assurance
• (B)  Negative assurance
• (C)  High level of assurance
• (D)  No assurance

Answer

Submitted By :Ali Uppal

Which of the following statements is correct?

• (A)  When a company negotiates a ‘friendly’ takeover, it usually appoints a firm of accountants to carry out due diligence on the takeover target.
• (B)  In an attestation engagement, the accountant is required to report on the quality of work performed.
• (C)  In a review engagement, evidence is gathered mainly by means of computation and inspection.
• (D)  In an engagement to review financial statements, the amount of work required is the same as for an audit

Answer

Submitted By :Ali Uppal

For companies required to produce interim financial statements (IFI):

• (A)  one audit firm should audit the IFI and a different firm should audit the financial statements for the year as a whole.
• (B)  one accountancy firm should review the IFI and a different firm should audit the financial statements for the year as a whole.
• (C)  the same firm should audit the IFI and the financial statements for the year as a whole.
• (D)  the same firm should review the IFI and the financial statements for the year as a whol

Answer

Submitted By :Ali Uppal

What is meant by negative assurance?

• (A)  The auditor cannot give an opinion due to lack of evidence.
• (B)  The client’s financial statements were found to be materially misstated.
• (C)  The auditor could not conduct any tests due to lack of controls.
• (D)  The auditor did not find anything to indicate that a material misstatement exists.

Answer

Submitted By :Ali Uppal

The auditor should examine subsequent realization of revenue such as dividends, interest,commission, etc to:­_____________?

• (A)  identify cases of unrecorded revenue
• (B)  ensure proper disclosure in the balance sheet
• (C)  recompute accrued income on the data of balance sheet
• (D)  Any of these

Answer

Submitted By :Ali Uppal

Which of these are types of Audit Report?

• (A)  Unqualified opinion
• (B)  Qualified opinion
• (C)  Adverse opinion
• (D)  Disclaimer of opinion.All of above 

Answer

Submitted By :Ali Uppal

You have been proposed as auditor of a company. What is the first step that you should take?

• (A)  Obtain the client’s permission to communicate with the existing auditor
• (B)  Obtain the existing auditor’s working papers
• (C)  Obtain a copy of the company’s most recent board minutes
• (D)  Obtain a copy of the existing auditor’s letter of engagement

Answer

Submitted By :Ali Uppal

Which one of the following may auditors NOT perform for their client?

• (A)  Taking management decisions
• (B)  Preparation of accounting records
• (C)  Preparing tax computations
• (D)  Advising on weaknesses in the internal control systems

Answer

Submitted By :Ali Uppal