Audit procedures – Collecting Audit Evidence MCQs

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Audit procedures are the processes and methods that the auditor performs in order to obtain audit evidence which enables him to make a conclusion
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Audit procedures – Collecting Audit Evidence

Audit procedures are the processes and methods that the auditor performs in order to obtain audit evidence which enables him to make a conclusion on the set audit objective and express his opinion. Here on MCQs.club we have prepared easily understandable Multiple-Choice Questions (MCQs) on Audit procedure that cover the audit procedures examples, steps, types and how to perform audit procedures MCQs. These MCQ on audit procedures are useful for Business management exams, Competitive exams and Professional accountancy exams.

  1. Directional testing – The concept of directional testing derives from the principle of double-entry bookkeeping, i.e. for every debit there should be a corresponding credit. Therefore, any misstatement of a debit entry will also result in a misstatement of a credit entry.
    1. The above statement is correct
    2. The above statement is incorrect
  1. Auditors primarily test debit entries (assets and expenses) for overstatement and credit entries (liabilities and income) for understatement. Which of the following statement is correct?
    1. Testing for understatement tests completeness.
    2. Testing for overstatement tests valuation, existence, rights and obligations, and occurrence.
    3. Both A&B
    4. None
  1. The key assertions for bank and cash are:
    1. Existence
    2. Valuation
    3. Both A&B
    4. None
  1. In case of Bank and cash the auditor relies mainly on:
    1. the bank confirmation letter
    2. the bank reconciliation.
    3. Both A&B
    4. None
  1. The principal risks of misstatement of the bank and cash balances in the financial statements are that:
    1. not all bank balances owned by the client are disclosed
    2. reconciliation differences between bank statements and the client’s cash book balances are incorrectly dealt with.
    3. material cash balances are omitted.
    4. All of the above
  1. The possible approaches the auditor can use for the confirmation of bank balances include:
    1. The auditor lists information about the bank balances from the client’s accounting records and asks each bank to confirm that the balances are correct.
    2. The auditor requests confirmation of the relevant bank balance(s) without providing any details to the bank.
    3. Both A&B
    4. None
  1. Typical areas covered by the confirmation letter to banks include:
    1. Confirmation of balances on all bank accounts at the end of the reporting period.
    2. Details of any unpaid bank charges, assets of the client entity held by the bank as security for lending.
    3. Details of any other client bank accounts that are known to the bank but not listed in the request to the bank for confirmation of balances.
    4. All of the above
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