A. Sales revenue
B. Revenue rendering service
C. Revenue from sale of fixed assets
D. Income from interest, dividend
✅ The correct answer is option C.
Auditing MCQs
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.
For vouching of which item, the auditor is most likely to examine cost records?
A. Commission earned
B. Bad debts recorded
C. Credit sales
D. Sale of scrap
✅ The correct answer is option D.
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.
To test whether sales have been recorded, the auditor should draw a sample from a file of
A. Purchase orders
B. Sales orders
C. Sales invoices
D. Bill of loading
✅ The correct answer is option C.
In case of vouching, the auditor is least likely to examine authorization by appropriate authority in case of –
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.
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. Recomputed accrued income on the data of balance sheet
D. Any of these
✅ The correct answer is option A.
The creditor’s accounts, generally, have credit balance. Debit balance may be due to
A. Advance paid against an order
B. Goods returned
C. Wrong debit to supplier account
D. Any of these
✅ The correct answer is option D.
Which of the following documents is not relevant for vouching cash sales?
A. Daily cash sales summary
B. Salesmen’s summary
C. Monthly statements sent to customers
D. Bank statement
✅ The correct answer is option C.
In order to vouch bought ledger, the auditor obtain confirmations from creditors. The principal reason for the auditor to examine suppliers statements at balance sheet date is to obtain evidence that
A. The supplier exist
B. There are no unrecorded liabilities
C. Recorded purchases actually occurred
D. To link creditors with cash book entries
✅ The correct answer is option B.