Types of Auditing MCQs [Mutliple Choice Questions and Answers]

Types of Auditing MCQs

Types of Auditing MCQs
Multiple Choice Questions and Answers

In this page, you will get Types of Auditing MCQs which are useful for B. Com and Various Professional Exams Like CA/CMA and CS.

We update this page frequently to add new questions. Chapter wise Auditing MCQs are also included in this post.

Introduction to Auditing

Auditing is a systematic examination of the books and records of a business or other organization, in order to ascertain or verify and report upon the facts regarding its financial operation and the result thereof.

Various Types of Audit

Statutory Audit: any audit carried on as per the requirement of law is called as a statutory audit. e.g.: all companies have to get their accounts audited as per the provision of the company’s Act of 2013.
Periodical/ Annual Audit: it is a kind of audit where the auditor verifies the account at the end of the financial year.
Interim audit: It is an audit conducted in the middle of the accounting year before the accounts are closed.
Partial Audit: when an auditor is asked to audit only a part of the account system. 
Balance sheet audit: it’s a kind of partial audit and is concerned with the verification of only those items appearing in the Balance Sheet.
Cost audit: cost audit is defined as the verification of cost accounting records, Data and techniques for its accuracy and authenticity.
Management audit: Management audit may be defined as a comprehensive examination of an organizational structure of a company, institution/government and its plans and objectives it means of operations and use of human and physical facilities.
Social Audit: Social audit is a process in which people work with the government to monitor the planning and implementation of the policies which are intended for the people. 
Continuous audit(CA): A continuous audit is one in which the auditor visits his client’s office at regular intervals throughout the year to verify the account.

Types of Auditing MCQs
Multiple Choice Questions and Answers

Choose the Correct Alternative

1. When audit is conducted at regular intervals or irregular intervals throughout the year, it is called:

a) Statutory Audit.

b) Internal Audit.

c) Interim Audit.

d) Continuous Audit.

Ans: d) Continuous Audit.

2. Audit at the end of the year is known as:

a) Periodical audit.

b) Standard audit.

c) Efficiency audit.

d) Operational audit.

Ans: a) Periodical audit.

3. An audit, which is conducted between two annual audits is known as:

a) Periodical audit.

b) Standard audit.

c) Interim audit.

d) Operational audit.

Ans: c) Interim audit.

4. The audit which is not a statutory requirement, but is conducted at the desire of owners, is known as:

a) Private audit.

b) Balance sheet audit.

c) Operational Audit.

d) Efficiency audit.

Ans: a) Private audit.

[Private audit is conducted mainly by Sole traders, firms, BOI etc]

5. Audit of government offices and departments is known as:

a) Tax audit.

b) Periodical audit.

c) Government audit.

d) Efficiency audit.

Ans: c) Government audit.

6. Government audit is conducted by the department maintained by government of India is known as:

a) Cost and Audit Department.

b) Accounts and Audit Department.

c) Tax and Audit Department.

d) GST and Audit Department.

Ans: b) Accounts and Audit Department.

7. Accounts and audit department is headed by:

a) Ministry of finance.

b) Home Minister.

c) Comptroller and Auditor General of India.

d) Prime Minister.

Ans: c) Comptroller and Auditor General of India.

8. Audit of accounts by the staff of the business is known as:

a) Statutory Audit.

b) Internal Audit.

c) Interim Audit.

d) Continuous Audit.

Ans: b) Internal Audit.

9. Audit is Compulsory for:

a) Companies.

b) Trust and Co-operative societies.

c) Companies formed under Special Act of Parliament.

d) All of the above.

Ans: d) All of the above.

10. Statutory audit is also known as:

a) Compulsory audit.

b) Financial Audit.

c) Financial statements audit.

d) All of the above.

Ans: d) All of the above.

Also Read: Chapterwise Auditing MCQs

👉 Introduction to Auditing MCQS

👉 Types of Auditing MCQS

11. Continuous audit is suitable for organisations where:

a) Business is very large and large numbers of transactions are needed to be checked.

b) Audited statements are required immediately after the close of financial year.

c) Banks

d) All of the above.

Ans: d) All of the above.

12. Early detection of frauds and errors are possible in which type of audit?

a) Statutory Audit.

b) Internal Audit.

c) Interim Audit.

d) Continuous Audit.

Ans: d) Continuous Audit.

13. Management audit is also known as:

a) Efficiency audit.

b) Performance audit.

c) Propriety audit.

d) Standard audit.

Ans: a) Efficiency audit.

14. Management audit involves:

a) Examination of organisational structure.

b) Review the performance of each functions and department of the management.

c) To help various levels of management in the effective discharge of their duties.

d) All of the above.

Ans: d) All of the above.

15. Cost audit is compulsory for:

a) Companies Specified under Table A and B.

b) Companies engaged in production of goods and services (regulated sector) and annual turnover is more than Rs. 25 crores for a single product.

c) Companies engaged in production of goods and services (non-regulated sector) and annual turnover is more than Rs. 35 crores for a single product.

d) Overall turnover of the companies from all its products and services should be equal to or more than 35 Crore in the immediately preceding financial year.

e) All of the above.

Ans: e) All of the above.

16. Cost audit is not applicable to:

a) Companies operating in SEZ.

b) Companies whose revenue from export is more than 75%.

c) Trading entities.

d) All of the above.

Ans: d) All of the above.

17. Audit conducted to know whether or not books of accounts are maintained as per the Companies Act’ 2013:

a) Performance audit.

b) Balance Sheet audit.

c) Secretarial audit.

d) Tax audit.

Ans: c) Secretarial audit.

18. Audit in depth is:

a) Sample Checking.

b) Complete checking.

Ans: a) Sample Checking.

19. Which audit is conducted to declare interim dividend?

a) Internal audit.

b) Interim audit.

c) Balance sheet audit.

d) Periodical audit.

Ans: b) Interim audit.

20. Audit conducted to check whether the various activities of the organisation are carried out efficiently is known as:

a) Internal audit.

b) Interim audit.

c) Balance sheet audit.

d) Performance audit.

Ans: d) Performance audit.

21. External audit is done by mcq

a) Management

b) Shareholders

c) Independent Auditor

d) Internal Auditor

Ans: c) Independent Auditor

22. Which is not a continuous audit technique?

a) Internal audit

b) Periodical Audit

c) Cost audit

d) Management Audit

Ans: b) Periodical Audit

23. Propriety audit refers to

a) Verification of accounts.

b) Examination accounts of propriety concerns.

c) Enquiry against justification and necessity of expresses.

d) Audit of Govt. companies.

Ans: c) Enquiry against justification and necessity of expresses.

24. Errors and frauds already committed can be discovered under the system of

a) Internal audit, internal check, internal control

b) External check

c) Statutory audit

d) Interim audit

Ans: a) Internal audit, internal check, internal control

Types of Auditing MCQs
Multiple Choice Questions and Answers

State whether the following statements are true or false

21. The term “Internal audit” and “Interim audit” convey the same meaning.      False

22. Periodical audit is an external audit undertaken by an independent auditor.  True

23. An internal auditor within the organisation undertakes interim audit.        True

24. Internal audit may be done by independent auditor.      True

25. Scope of duties and responsibilities of internal auditor is determined by the Companies Act’ 2013.   False, Management

26. Compulsory audit is conducted by a practicing chartered accountant.         True

27. Continuous audit is expensive and not suitable for small organisation.        True

28. Continuous audit is suitable for all types of institutions.      False, suitable for small organisations

29. Environmental audit is a process to review the effectiveness of environmental management.   True

30. A successful energy management programme begins with a thorough energy audit.       True

31. The Branch Auditor shall prepare report on the Accounts of the Branch examined by him and send it to Audit Committee. False

32.   Internal audit is conducted by the staff of the entity or by an independent professional appointed for that purpose. True

Types of Auditing MCQs
Multiple Choice Questions and Answers

Fill in the blanks

33. Final audit is less expensive and suitable particularly for small-scale business concerns. (Final audit/Continuous audit)

34. Continuous audit is compulsory for a banking organisation. (Periodical audit/Continuous audit)

35. Internal audit facilitates the work of final audit. (Hampers/facilitates)

36. Internal audit ascertains the degree of compliance with predetermined policies, plans and procedures.  (Interim audit/Internal audit)

37. Balance sheet audit means verification of items appearing in the position statement. (Management/Balance sheet audit)

38. Periodical Audit is suitable for small business organisations. (Periodical audit/Continuous audit)

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