FREE Bachelor of Science in Accountancy: Audit Questions and Answers

Question 1

The kind of control that is intended to stop, catch, and fix important misstatements before the action takes place is called a:

Accepted Answer

Preventative Control

Answer

Preventive measures. A corporation implements preventative control to find problems before they happen.
Making the manager evaluate an adjusting journal entry created by a senior accountant before booking is an illustration of this.

Question 2

Which form of statement does the auditor tackle from the bottom up?

Accepted Answer

Completeness

Answer

An auditor must start with the source document, follow each individual item through the process, and confirm that they appear in the financial statements in order to verify completeness and ensure that nothing is being falsified.

Question 3

For BDE Company, the ratio of accounts payable turnover grew from year 3 to year 4. What might be the cause of this?

Accepted Answer

Cost of goods sold increased from year 3 to year 4 but accounts payable remained the same.

Answer

Cost of goods sold divided by average accounts payable equals the accounts payable turnover ratio.
The ratio will rise if the numerator rises.

Question 4

An Emphasis-of-Matter Paragraph should be inserted to the auditors' report when:

Accepted Answer

There is a going concern uncertainty

Answer

The auditor must include an explanation that uses the terms "serious doubt" and "going concern" where there is ambiguity about the going concern.

Question 5

True or False: Even if an auditor does not find any false statements during an audit, a serious flaw or material weakness may still exist within a corporation.

Accepted Answer

True

Answer

Even if there are no false statements found during an audit, an auditor may not find any flaws or significant weaknesses in internal controls.

B. Acy Bachelor of Accountancy Practice Test

B. Acy Bachelor of Accountancy Practice Test

FREE Bachelor of Science in Accountancy: Audit Questions and Answers