Free CGAP MCQ Questions and Answers

Question 1

Vouching of _____ refers to the process of verifying the balances of all revenue and expense accounts.

Accepted Answer

Impersonal ledger.

Answer

The impersonal ledger, also known as the nominal ledger, contains all the revenue and expense accounts, as well as asset and liability accounts. Vouching the impersonal ledger involves verifying the balances of these income and expenditure accounts to ensure they are accurately recorded and supported by appropriate documentation. This process is crucial for determining the true profit or loss of the business.

Question 2

The best illustration of ________ is preliminary costs.

Accepted Answer

fictitious asset.

Answer

Preliminary costs are expenses incurred before the commencement of business operations, such as legal fees for company formation or underwriting commissions. They are classified as fictitious assets because they do not have any physical existence or realizable value, nor do they generate future economic benefits directly. Instead, they represent deferred revenue expenditures that are gradually written off against profits over several years.

Question 3

Regular auditing is also known as .

Accepted Answer

Balance sheet audit.

Answer

Regular auditing, often referred to as a final audit, typically culminates in the examination of the company's financial statements, including the balance sheet and income statement. A balance sheet audit specifically focuses on verifying the assets, liabilities, and equity presented in the balance sheet. In many contexts, a 'regular audit' implies a comprehensive review leading to an opinion on the full set of financial statements, with the balance sheet being a core component.

Question 4

A government company's auditor must be chosen by .

Accepted Answer

the central government.

Answer

For government companies, the appointment of auditors is typically handled by the Comptroller and Auditor General of India (CAG), who acts on behalf of the Central Government. This ensures government oversight and accountability for entities where the government has a significant stake. Therefore, the central government, through the CAG, is responsible for choosing the auditor.

Question 5

The cash book audit's primary goal could be .

Accepted Answer

to know that all receipts and payments have been properly recorded.

Answer

The primary goal of auditing the cash book is to ensure the accuracy and completeness of all cash transactions. This involves verifying that every receipt has been properly recorded and deposited, and every payment is authorized, supported by vouchers, and correctly entered. This helps prevent fraud, errors, and misappropriation of cash, which is a highly liquid asset.

CGAP - Certified Government Auditing Professional Practice Test

CGAP - Certified Government Auditing Professional Practice Test

Free CGAP MCQ Questions and Answers