Question: Which of the following documents is not relevant for vouching cash sales?

• 1. Daily cash sales summary
• 2. Salesmen’s summary
• 3. Monthly statements sent to customers
• 4. Bank statement

Question: To test whether sales have been recorded, the auditor should draw a sample from a file of__________?

• 1. purchase orders
• 2. sales orders
• 3. sales invoices
• 4. bill of loading

Question: The auditor should examine subsequent realization of revenue such as dividends, interest,commission, etc to:­_____________?

• 1. identify cases of unrecorded revenue
• 2. ensure proper disclosure in the balance sheet
• 3. recompute accrued income on the data of balance sheet
• 4. Any of these

Question: What is meant by negative assurance?

• 1. The auditor cannot give an opinion due to lack of evidence.
• 2. The client’s financial statements were found to be materially misstated.
• 3. The auditor could not conduct any tests due to lack of controls.
• 4. The auditor did not find anything to indicate that a material misstatement exists.

Question: For companies required to produce interim financial statements (IFI):

• 1. one audit firm should audit the IFI and a different firm should audit the financial statements for the year as a whole.
• 2. one accountancy firm should review the IFI and a different firm should audit the financial statements for the year as a whole.
• 3. the same firm should audit the IFI and the financial statements for the year as a whole.
• 4. the same firm should review the IFI and the financial statements for the year as a whole.

Question: Which of the following statements is correct?

• 1. When a company negotiates a ‘friendly’ takeover, it usually appoints a firm of accountants to carry out due diligence on the takeover target.
• 2. In an attestation engagement, the accountant is required to report on the quality of work performed.
• 3. In a review engagement, evidence is gathered mainly by means of computation and inspection.
• 4. In an engagement to review financial statements, the amount of work required is the same as for an audit

Question: What sort of assurance is provided in a review engagement?

• 1. Positive assurance
• 2. Negative assurance
• 3. High level of assurance
• 4. No assurance

Question: Which one of the following is part of the auditor’s function?

• 1. Conducting the inventory count
• 2. Obtaining and evaluating audit evidence on the financial statements
• 3. Calculating the year-end accruals figure for inclusion in the accounts
• 4. Providing representations to management

Question: Which of the following does NOT belong in the auditors’ report?

• 1. Introductory paragraph specifying the pages to which the report relates and the accounting convention adopted
• 2. Basis of the opinion
• 3. Involvement of any specialist
• 4. Statement of responsibilities of directors and auditors

Question: What is meant by the expression ‘expectation gap’?

• 1. The gap between how the directors of a company perform their duties and how the shareholders expect them to perform
• 2. The gap between how the directors of a company perform their duties and how the general public expects them to perform
• 3. The gap between the public perception of the role of company auditors and their statutory role and responsibilities
• 4. The gap between the auditors’ own perception of their duties and how they are set out in the Companies Act