Page 181 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
(d) Sampling risk will always be in existence.

83 (SM23)
Financial statements of a firm have been put up for audit before CA Manushi. On going through financial
statements, she wants to verify assertions contained in financial statements and has planned certain
procedures for carrying out detailed checking.
(A) She plans to verify some major bills debited in “Machinery repair” account. The purpose of it is
to ensure that bills are entered correctly and their classification is proper.

(B) She plans to verify that all balances appearing under trade payables are genuine and not fake.

(C) She plans to compare amount of wages paid in current year and last year. It is also planned to
verify relationship between the number of employees and wages paid in both years.

(D) She is of the view that it is necessary to examine title deeds of “land” appearing in financial
statements of the firm.

(E) The firm is engaged in export of goods to Europe. The sales invoices raised in Euros are converted
into Indian rupees as per applicable norms.
I. As regards description given regarding verification of bills debited in “Machinery repair” account,
identify what she intends to perform?
(a) Tests of Controls
(b) Tests of transactions
(c) Tests of balances
(d) Risk assessment procedures
II. Identify which type of assertion she intends to focus when she wants to ensure genuineness of
trade payables.
(a) Occurrence
(b) Cut-off
(c) Existence
(d) Accuracy
III. As regards comparison of wages of current year and last year and comparison of relationship
between the number of employees and wages paid in both years, identify what she is trying to
do?
(a) She is intending to perform tests of details.
(b) She is intending to perform tests of transactions.
(c) She is intending to perform tests of balances.
(d) She is intending to perform substantive analytical procedures.

IV. In case of examination of title deeds of “land”, which of the following fits into most appropriate
description of such an audit procedure?
(a) Observation
(b) Inspection
(c) External confirmation
(d) Enquiry
V. She wants to verify whether conversion of foreign currency into Indian rupees is proper or not.
Identify what she is trying to do?
(a) Reperformance
(b) Recalculation
(c) Observation
(d) Inspection

www.auditguru.in 175 | P a g e