Auditing (B category)
· Question 1. Which of the following is not a generally accepted accounting principle under the European directives on the presentation of accounts
o A. going-concern
o B. netting-off balances
o C. prudence
o D. consistency
· Question 2. In a wholesale firm, which of the following types of document might an auditor use as the basis for checking that all purchases have been properly entered in the books?
o A. statements of account provided by customers
o B. delivery slips for goods sold
o C. receipt slips countersigned by the person in charge of stocks
o D. bank statements
· Question 3. The complete annual financial statements consist of:
o A. the balance sheet, notes, and directors’ signatures
o B. the balance sheet, the profit and loss account, and notes
o C. the profit and loss account, notes, and directors' signatures
o D. the balance sheet, profit and loss account, and the audit report
· Question 4. The external auditor's report is primarily addressed to:
o A. the internal auditor and head of finance
o B. potential investors and stock market analysts
o C. the shareholders and company management
o D. the board of Directors of the parent company
· Question 5. A firm with a turnover of € 30 million has variable costs totalling € 20 million. Its fixed costs amount to € 4 million. What is the break-even point?
o A. € 10 million
o B. € 12 million
o C. € 16 million
o D. € 26 million
· Question 6. In its first year of activity a company buys 100 items at € 10 each in September, and 50 similar items at € 20 each in October. In November it sells 70 items at € 30 each. At 31 December the company values its stock at € 1 300.
By which method did it value the stock?
o A. first in, first out (FIFO)
o B. last in, first out (LIFO)
o C. weighted average cost
o D. replacement value
· Question 7. Which of the following is not generally a current asset?
o A. cash
o B. inventory
o C. property
o D. prepaid insurance
· Question 8. The main benefit of budgeting, from a control perspective, is:
o A. it forces one to examine the alternative courses of action
o B. it is necessary for strategic planning
o C. it provides a channel of communication
o D. it provides a standard of comparison
· Question 9. If a company's gross profit margin is higher than the previous year, which of the following can not be true?
o A. sales decreased and cost of sales increased
o B. sales increased and cost of sales increased
o C. sales decreased and cost of sales decreased
o D. sales increased and cost of sales decreased
· Question 10. Which of the following would not be found on a standard balance sheet?
o A. stocks
o B. accruals and deferred income
o C. extraordinary charges
o D. creditors payable after more than one year
· Question 11. Which type of check covers all levels of management from the point of view of economy, efficiency and effectiveness?
o A. inventory control
o B. stock count
o C. performance audit
o D. compliance audit
· Question 12. The procedure used to check the accuracy of the description of the system being audited, with a transaction of each type being selected and followed right the way through the system of the organisation being audited, is known as:
o A. recording test
o B. walk-through test
o C. management control
o D. audit risk testing
· Question 13. Which of the following points is not necessarily defined in an audit programme:
o A. systems, documents and financial statements to be audited
o B. specific audit objectives
o C. scope of the audit
o D. recommendations
· Question 14. An auditor can check possible unrecorded liabilities by checking:
o A. legal fees, costs and expenses
o B. depreciation
o C. banker’s charges and costs
o D. tax provisions
· Question 15. For which of the following reasons should an Information Systems Auditor prepare an audit programme?
I. to structure the Auditor’s own planning
II. to guide his assistants in performing the planned procedures
III. to provide audit documentation for review reference.
o A. I only
o B. II only
o C. I and III only
o D. I, II, and III
· Question 16. Which of the following should not be considered in establishing the priority of audits included in an annual audit plan?
o A. prior audit findings
o B. the time period since the last audit
o C. auditee procedural changes
o D. use of audit software
· Question 17. Letters to suppliers for confirmation of accounts payable balances at the balance sheet date may be unnecessary because:
o A. they accomplish the same objective as a cut-off test, which is always performed
o B. accounts payable balances at the balance sheet date may not be paid before the audit is completed
o C. correspondence with the audit client's attorney will reveal any legal action by suppliers for non-payment
o D. there is other reliable external evidence available to support the balance.
· Question 18. An audit of a public-sector body may go beyond expression of an opinion on the fairness of financial presentation to include:
o A. Programme results: Yes; Economy and Efficiency: No
o B. Programme results: Y...
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