A. Bad debts written off
B. Sales return
C. Purchase return
D. Discount allowed to customers as per organizational policy
✅ The correct answer is option D.
141. Vendors should be approved by Management before purchase department executes an order. If this is not done, then which of the following situations may arise?
A. Purchases could be made from vendors whose product quality may not be good
B. Purchases may be made from related parties without management’s knowledge
C. Purchases could be made from vendors who may have offered price to manager purchases
D. Any of these
✅ The correct answer is option D.
139. Which of the following is not true with regard to verification of assets?
A. It invoices substantiation of occurrence of transactions
B. Its objective is to establish existence, ownership, possession, valuation and disclosure of assets
C. The auditor has to form an opinion on different aspects
D. All are true
✅ The correct answer is option A.
121. An auditor is verifying valuation of building which has been self constructed by the client. Which of the following documents is least relevant to the auditor for verification purposes?
A. Bills of contractor
B. Minutes of meeting of board of directors
C. Certificates of engineer and architect
D. Loan agreement
✅ The correct answer is option B.
119. Which of the following assets is least likely to be subjected to lien?
A. Freehold land
B. Plant and machinery
C. Leasehold property
D. Motor vehicles
✅ The correct answer is option C.
117. An analysis of fixed assets account has revealed possibility of unrecorded sale of plant and machinery. Which of the following audit procedures may be adopted to discover it?
A. Examination of property tax files
B. Inquiry of plant manager
C. Examination of debits to accumulated depreciation
D. All of the above
✅ The correct answer is option D.
115. The auditor has noticed existence of recurring losses sale of fixed assets this indicates
A. Depreciation charges are insufficient
B. Policy of sale or disposal of fixed assets needs to be reviewed
C. The sale of assets have not been properly authorized
D. Accounting errors
✅ The correct answer is option A.
114. Which of the following financial statements assertions are addressed by testing the cut off for plant asset addition?
A. Existence and ownership
B. Valuation and disclosure
C. Possession and ownership
D. Completeness and valuation
✅ The correct answer is option D.
113. The auditor while verifying prepaid insurance has concluded that there is inadequate insurance of building, He should__
A. Modify his audit report
B. Insist it should be disclosed in the notes to financial statements
C. Write it in letter of weakness
D. Both (b) and (c)
✅ The correct answer is option D.
131. While verifying intangible assets, an auditor would recomputed amortization charges and determines whether amortization period is reasonable. The auditor tries to establish ….by doing it
A. Valuation
B. Existence
C. Disclosure
D. Possession
✅ The correct answer is option A.