All Free Accounting MCQs with Answers
Every Accounting question in the bank, across all chapters, each with the correct answer and a written explanation. Free and unlimited, with no account needed.
1,971 questions · page 29 of 99
- A. 1, 2 and 3 only
- B. 1, 3 and 4 only
- C. 2, 3 and 4 only
- D. 1, 2 and 4 only
Explanation: The fundamental principles include professional competence and due care, integrity and objectivity.
Correct answer: 1, 3 and 4 only- A. Self-interest threat
- B. Self-review threat
- C. Advocacy threat
- D. Familiarity threat
Explanation: A favourable loan creates a financial interest in the client relationship, so the auditor may be biased in protecting that benefit.
Correct answer: Self-interest threat- A. Other audit clients
- B. Previous years
- C. Other companies in the same industry
- D. Budget
Explanation: Analytical procedures commonly compare results with prior years, budgets and industry information.
Correct answer: Other audit clients- A. The gap between how the directors of a company perform their duties and how the shareholders expect them to perform
- B. The gap between how the directors of a company perform their duties and how the general public expects them to perform
- C. The gap between the public perception of the role of company auditors and their statutory role and responsibilities
- D. The gap between the auditors' own perception of their duties and how they are set out in the Companies Act
Explanation: The expectation gap is the difference between what the public believes auditors are responsible for and what auditing standards and law…
Correct answer: The gap between the public perception of the role of company auditors and their statutory role and responsibilities- A. Introductory paragraph specifying the pages to which the report relates and the accounting convention adopted
- B. Basis of the opinion
- C. Involvement of any specialist
- D. Statement of responsibilities of directors and auditors Hire An Accountant
Explanation: An auditor's report normally includes the introduction, responsibilities, opinion and basis of opinion, but it does not ordinarily include…
Correct answer: Involvement of any specialist- A. Conducting the inventory count
- B. Obtaining and evaluating audit evidence on the financial statements
- C. Calculating the year-end accruals figure for inclusion in the accounts
- D. Providing representations to management Get Executive Coaching
Explanation: The auditor's central function is to obtain and evaluate sufficient appropriate evidence supporting an opinion on the financial…
Correct answer: Obtaining and evaluating audit evidence on the financial statements- A. Positive assurance
- B. Negative assurance
- C. High level of assurance
- D. No assurance
Explanation: A review engagement provides limited assurance, traditionally expressed through negative assurance such as stating that nothing has come…
Correct answer: Negative assurance- A. one audit firm should audit the IFI and a different firm should audit the financial statements for the year as a whole.
- B. one accountancy firm should review the IFI and a different firm should audit the financial statements for the year as a whole.
- C. the same firm should audit the IFI and the financial statements for the year as a whole.
- D. the same firm should review the IFI and the financial statements for the year as a whole.
Explanation: The interim financial statements are normally reviewed by the same firm that audits the annual financial statements, because that auditor…
Correct answer: the same firm should review the IFI and the financial statements for the year as a whole.- A. The auditor cannot give an opinion due to lack of evidence.
- B. The client's financial statements were found to be materially misstated.
- C. The auditor could not conduct any tests due to lack of controls.
- D. The auditor did not find anything to indicate that a material misstatement exists.
Explanation: Negative assurance means the auditor states that nothing came to attention indicating a material misstatement, rather than giving the…
Correct answer: The auditor did not find anything to indicate that a material misstatement exists.- A. identify cases of unrecorded revenue
- B. ensure proper disclosure in the balance sheet
- C. recompute accrued income on the data of balance sheet
- D. Any of these
Explanation: Checking whether dividends, interest and commissions are received after year-end can reveal income earned before year-end but omitted from…
Correct answer: identify cases of unrecorded revenue571. 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
Explanation: A sample of sales invoices can be traced to the sales records and ledger to verify that invoiced sales have been recorded.
Correct answer: sales invoices- A. Daily cash sales summary
- B. Salesmen's summary
- C. Monthly statements sent to customers
- D. Bank statementAccounting & Auditing
Explanation: Cash sales are settled immediately, so monthly statements sent to credit customers are not relevant evidence for vouching them.
Correct answer: Monthly statements sent to customers- A. Unqualified opinion
- B. Qualified opinion
- C. Disclaimer of opinion
- D. Adverse opinion
Explanation: A disclosed depreciation-method change with no material effect on the current financial statements does not require a modified opinion…
Correct answer: Unqualified opinion- A. unqualified opinion
- B. unqualified opinion with reference to notes to the accounts
- C. qualified opinion
- D. disclaimer of opinion
Explanation: A serious going-concern uncertainty that is adequately disclosed does not automatically require a qualification; the auditor refers…
Correct answer: unqualified opinion with reference to notes to the accounts- A. Qualified opinion
- B. Disclaimer of opinion
- C. Adverse opinion
- D. Unqualified report with 'an emphasis of matter' paragraph;
Explanation: A client-imposed scope restriction normally leads to a qualified opinion when the missing evidence could affect the statements but is not…
Correct answer: Qualified opinion- A. the data of AGM
- B. later than the date on which the accounts are approved in board's meeting
- C. earlier than the date on which the accounts are approved by the management
- D. Both A. and B.
Explanation: The auditor’s report cannot be dated before management or the board has approved the financial statements, because the auditor must…
Correct answer: earlier than the date on which the accounts are approved by the management- A. Unlimited liability
- B. Manufacturing
- C. Banking
- D. Nonprofit making
Explanation: The special right to visit foreign branches is associated with bank audits under banking regulations, whereas an auditor of a…
Correct answer: Manufacturing- A. Shareholders in an annual general meeting
- B. Shareholders in general meeting
- C. Board of directors in board meeting
- D. Any of the aboveCompare Business Loans
Explanation: A branch auditor is appointed by the shareholders in a general meeting, rather than by the board alone.
Correct answer: Shareholders in general meeting- A. Books and accounts of a company
- B. Books, accounts and documents of the company
- C. Books, accounts and vouchers of the company
- D. Notices and documents of the company
Explanation: An auditor’s access extends beyond accounting books to the company’s accounts and vouchers, wherever they are kept.
Correct answer: Books, accounts and vouchers of the company- A. Erstwhile director
- B. Internal auditor
- C. Relative of a director
- D. Only (B. and (C.
Explanation: An internal auditor is generally an employee or officer of the company, and that status disqualifies the person from acting as its…
Correct answer: Internal auditor