1. 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.
2. The title of AAS­2 issued by Council of ICAI is ___ a) Objective and Scope of the Financial Statements b) Objective and Scope of the Audit of Financial Statements c) Objective and Scope of Business of an Entity d) Objective and Scope of Financial Statements Audit
3. 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) He should examine whether recognised accounting principle have been consistently
4. 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 principle
5. 'Goods sent on approval basis' have been recorded as 'Credit sales'. This is an example of _ a) Error of principle b) Error of commission c) Error of omission d) Error of duplication
6. Which of the following statements is not true? a) Management fraud is more difficult to detect than employee fraud b) Internal control system reduces the possibility of occurrence of employee fraud and management fraud c) The auditor's responsibility for detection and prevention of errors and frauds is similar. d) All statements are correct.
7. As per AAS­4 if auditor detects an error then - a) He should inform the management. b) He should communicate it to the management if it is material c) The auditor should ensure financial statements are adjusted for detected errors. d) Both (b) and (c)
8. Which of the following is not a limitation of audit as per AAS­4? a) Objectivity of auditor's judgment b) Selective testing c) Persuasiveness of evidence d) Limitations of internal control system.
9. How many principles are listed in AAS­1 which govern auditor's professional obligation? a) Nine b) Fourteen c) Seven d) Eight
10. Both auditing and accounting are concerned with financial statements. Which of the following a) Auditing uses the theory of evidence to verify the financial information made available by Accountancy b) Auditing lends credibility dimension and quality dimension to the financial statements prepared by the accountant. c) Auditor should have through knowledge of accounting concepts and convention to enable him to express an opinion on financial statements d) All of the above.