111. __________ is a systematic examination of the books and records or a business.
A. Auditing
B. Vouching
C. Verification
D. Checking
✅ The correct answer is option A.
Auditing
112. The independence of an internal auditor will most likely be assured if he reports to the
A. President Finance
B. President System
C. Managing Director
D. CEO
✅ The correct answer is option C.
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.
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.
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.
116. Control risk is assessed at
A. Overall financial statements level
B. Fraud risk factor level
C. Financial statement assertion level
D. Control environment level
✅ 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.
118. Which of the following are included in test of control?
A. Reperformance and observation
B. Inquiry and analytical procedures
C. Comparison and conformation
D. Inspection and verification
✅ The correct answer is option A.
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.
120. The overall attitude and awareness of an entity’s board of directors concerning the importance of internal control is reflected in
A. Accounting controls
B. Control environment
C. Control procedures
D. Supervision
✅ The correct answer is option B.