NTS :: All Aptitude Test ::

1.____________ is a systematic examination of the books and records or a business?
A. . Auditing
B. Vouching
C. Verification
D. . Auditing

2.The term ‘Audit’ is derived from a Latin word “audire” which means___________?
A. To inspect
B. To examine
C. To hear
D. To inspect

3.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. Expression of opinion

4.An auditor is like a_______________?
A. Blood haunt
B. Watch dog
C. May both according to situation
D. Blood haunt

5.Process of verifying the documentary evidences of transactions are known as___________?
A. Auditing
B. Testing
C. Vouching
D. Auditing

6.Auditing is compulsory for____________?
A. Small scale business
B. Partnership firms
C. Joint stock Companies
D. Small scale business

7.Concealment of shortage by delaying the recording of cash receipts is known as_____________?
A. Embezzlement
B. Misappropriation
C. Lapping
D. Embezzlement

8.The fundamental objective of the audit of a company is to_____________?
A. Protect the interests of the minority shareholders
B. Detect and prevent errors and fraud
C. Assess the effectiveness of the company’s performance
D. Protect the interests of the minority shareholders

9.The concept of stewardship means that a company’s directors________________?
A. Are responsible for ensuring that the company complies with the law
B. Are responsible for ensuring that the company pays its tax by the due date
C. Safeguard the company’s assets and manage them on behalf of the shareholders
D. Are responsible for ensuring that the company complies with the law

10.Why do auditors concentrate their efforts on material items in accounts?
A. Because they are easier to audit
B. Because it reduces the audit time
C. Because the risk to the accounts of their being incorrectly stated is greater
D. Because they are easier to audit

11.Which of the following is NOT the responsibility of a company’s directors?
A. Reporting to the shareholders on the accuracy of the accounts
B. Establishment of internal controls
C. Keeping proper accounting records
D. Reporting to the shareholders on the accuracy of the accounts

12.International auditing standards are issued by the______________?
A. International Accounting Standards Board
B. International Federation of Accountants
C. International Standards Board
D. International Accounting Standards Board

13.Which of the following is not true about opinion on financial statements?
A. The auditor should express an opinion on financial statements.
B. His opinion is no guarantee to future viability of business
C. He is responsible for detection and prevention of frauds and errors in financial statements
D. The auditor should express an opinion on financial statements.

14.A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of____________?
A. Error of omission
B. Error of commission
C. Compensating error
D. Error of omission

15.When an auditor is proposed for removal from office, which one of the following is he NOT permitted to do?
A. Circulate representations to members
B. Apply to the court to have the proposal removed
C. Speak at the AGM/EGM where the removal is proposed
D. Circulate representations to members

16.Which one of the following is NOT a duty of the auditor?
A. Duty to report to the company’s bankers
B. Duty to report to the members
C. Duty to sign the audit report
D. Duty to report to the company’s bankers

17.Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of the auditor?
A. The shareholders in a general meeting
B. The managing director
C. The board of directors in a board meeting
D. The shareholders in a general meeting

18.The independent auditor’s primary responsibility is to______________?
A. the directors
B. the company’s creditors (payables)
C. the company’s bank
D. the directors

19.How long is the auditor’s term of office?
A. Until the audit is complete
B. Until the financial statements are complete
C. Until the next AGM (Annual General Meeting)
D. Until the audit is complete

20.Which of the following is correct in relation to materiality?
A. A matter is material only if it changes the audit report
B. A matter is material if the auditor and the directors both decide that further work needs to be done in the area under question
C. A matter is material only if it affects directors’ emoluments
D. A matter is material only if it changes the audit report

21.Which one of the following is NOT considered to be part of planning?
A. Background i.e. industry
B. Previous year’s audit i.e. any qualifications in the report
C. Considering the work to be done by the client staff e.g. internal audit
D. Background i.e. industry

22.Audit risk is composed of 3 factors. Which of the following is NOT one of those factors?
A. Compliance risk
B. Detection risk
C. Control risk
D. Compliance risk

23.Which of the following should NOT be considered at the planning stage?
A. The timing of the audit
B. Analytical review
C. Last year’s written representation letter
D. The timing of the audit

24.At the planning stage you would NOT consider____________?
A. the timing of the audit
B. whether corrections from the inventory count have been implemented
C. last year’s audit
D. the timing of the audit

25.Which of the following describes sampling risk?
A. The risk of the auditor carrying out a test the wrong way round
B. The risk of reliance on unsuitable audit evidence
C. The risk that the sample does not reflect the population
D. The risk of the auditor carrying out a test the wrong way round

26.Which of the following is NOT an accepted method of selection in sampling?
A. Systematic selection
B. Pervasive selection
C. Random selection
D. Systematic selection

27.Which of the following are you unlikely to see in the current file of auditors’ working papers?
A. Memorandum & articles of association
B. Audit planning memorandum
C. Summary of unadjusted errors
D. Memorandum & articles of association

28.According to ISA 500, the strength of audit evidence is determined by which two qualities?
A. Appropriateness & competence
B. Sufficiency & appropriateness
C. Reliability & extensiveness
D. Appropriateness & competence

29.Which of the following is normally the most reliable source of audit evidence?
A. Internal audit
B. Suppliers’ statements
C. Board minutes
D. Internal audit

30.The degree of effectiveness of an internal control system depends on:
A. The design of the internal control system and the implementation of the controls
B. The design of the internal controls and the implementation of the control system
C. The implementation of the controls and the correctness of the accounting records
D. The design of the internal control system and the implementation of the controls

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