All Free Accounting MCQs with Answers

• A. Be included in the stock
• B. Not be included in the stock
• C. Not be checked by auditor
• D. None of the aboveGet Study Guides

Explanation: Under a sale-or-return arrangement, ownership remains with the seller until the buyer accepts the goods or the return period expires, so…

• A. cost
• B. Market price
• C. Cost or market price whichever is lower
• D. Cost less depreciation

Explanation: Floating assets, such as stock and other current assets, are generally valued conservatively at cost or market value, whichever is lower.

• A. Cost
• B. Market price
• C. Cost or Market price whichever is lower.
• D. Cost less depreciation.

Explanation: The traditional rule for valuing stock is cost or market value, whichever is lower, so that expected losses are recognised but unrealised…

• A. Examining the physical existence and valuation of assets.
• B. Examining the journal and ledger
• C. Examination of vouchers related to assets.
• D. None of the above.

Explanation: Verification establishes that assets physically exist and are stated at appropriate values, while also commonly considering ownership and…

• A. Materiality is a relative concept
• B. Materiality judgments involve both quantitative and qualitative judgments
• C. Auditor's consideration of materiality is influenced by the auditor's perception of the needs of an informed decision maker who will rely on the financial statements
• D. At the planning state, the auditor considers materiality at the financial statement level only

Explanation: Materiality is considered both for the financial statements as a whole and for particular account balances, classes of transactions, or…

• A. Testing of accounts and records
• B. Checking of selected number of transactions
• C. Examination of adjusting and closing entries
• D. Checking of all transactions recorded

Explanation: Test checking means examining a representative selection of transactions rather than checking every transaction.

• A. Curtailment of expenses
• B. Checking of Wastages
• C. Under valuation of assets
• D. Over Valuation of assets

Explanation: Window dressing is the deliberate presentation of accounts to make financial performance or position appear better than it really is…

• A. Technical errors
• B. Errors of principle
• C. Compensating errors
• D. None of the above

Explanation: An error of omission occurs when a transaction or part of it is left unrecorded, making it a technical or clerical error rather than an…

• A. Staff specially appointed for the purpose
• B. Internal auditor
• C. Supervisor of the staff
• D. Members of the staff

Explanation: Internal check is performed by members of the staff as part of their normal duties, with duties divided so that one employee checks…

• A. Internal check system
• B. Continuous audit
• C. Internal audit system
• D. None of theseHire An Accountant

Explanation: Concurrent audit examines transactions while they are being processed, usually as a component of an organisation's internal audit system.

• A. Shareholders
• B. Management
• C. Government
• D. Law

Explanation: Internal audit is an in-house management function, so management determines its objectives and scope.

• A. By independent auditor
• B. Statutorily appointed auditor
• C. By a person appointed by the management
• D. By a government auditor

Explanation: Internal audit is conducted by a person or department appointed by management to review operations and controls.

• A. Teeming and lading
• B. Looping
• C. Embezzlement
• D. Hacking

Explanation: Lapping is the concealment of a cash theft by using a later customer's receipt to cover an earlier shortfall.

• A. Performance reviews
• B. Physical controls
• C. Organizational structure
• D. Segregation of duties

Explanation: Performance reviews, physical controls and segregation of duties are control activities under ISA 315.

• A. Participation of management
• B. Information processing
• C. Commitment to competence
• D. Human resource policies and practices

Explanation: Information processing is a control activity concerned with processing and checking transactions.

• A. The design of the internal control system and the implementation of the controls
• B. The design of the internal controls and the implementation of the control system
• C. The implementation of the controls and the correctness of the accounting records
• D. The design of the internal control system and the correctness of the accounting records

Explanation: Control effectiveness requires both a properly designed control system and the effective implementation of its controls.

• A. Internal audit
• B. Suppliers' statements
• C. Board minutes
• D. Analytical reviewHire An Accountant

Explanation: Suppliers' statements are external documentary evidence obtained from an independent source, so they are generally more reliable than…

• A. Appropriateness & competence
• B. Sufficiency & appropriateness
• C. Reliability & extensiveness
• D. Objectivity & independence

Explanation: ISA 500 evaluates audit evidence through sufficiency, meaning its quantity, and appropriateness, meaning its relevance and reliability.

• A. Memorandum & articles of association
• B. Audit planning memorandum
• C. Summary of unadjusted errors
• D. Details of the work done on the inventory count

Explanation: The memorandum and articles of association are standing information about the entity and are normally kept in the permanent audit file.

• A. Systematic selection
• B. Pervasive selection
• C. Random selection
• D. Haphazard selection

Explanation: Recognised selection methods include random, systematic, and haphazard selection.