Page 22 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs

315.26 M21M
The risk that the financial statements are materially misstated prior to audit is called-
a) Risk of material misstatement
b) detection risk
c) audit risk
d) significant risk

315.27 M21M
……………. refer to representations by management, explicit or otherwise, that are embodied in the
financial statements, as used by the auditor to consider the different types of potential
misstatements that may occur.
a) Assertions
b) Positive Confirmation
c) Written representation
d) Audit Evidence.

315.28 M21M
Reasonable assurance is a_____ level of assurance
a) low
b) limited
c) absolute
d) high

315.29 N22M
Consider the following data appearing in financial statements of a firm: -
Particulars Amount in ` Amount in `
Machinery (at cost) XXX 10,00,000
Less: Depreciation of earlier years 6,00,000 XXX
Less: Depreciation of year 60,000 6,60,000
WDV at end of year XXX 3,40,000
Read the following statements on basis of above: -
(i) The firm owns machinery.
(ii) The machinery is being utilized in business of firm productively.
(iii) The machinery physically exists.
Which of following would be obvious assertions on the basis of above data?
a) Only assertions (i) and (ii) can be inferred.
b) Only assertions (ii) and (iii) can be inferred.
c) Only assertions (i) and (iii) can be inferred.
d) All assertions (i), (ii) and (iii) can be inferred.

315.30 M22M
Consider the following statements pertaining to nature and meaning of “assertions”:-
Statement I—-Assertions are representations by the management which are present in financial
statements.
Statement II —-The assertions have to be necessarily explicit.
Which of the following is correct?
a) Only Statement I is true.
b) Only Statement II is true.
c) Both statements I and II are true.
d) Both statements I and II are false.

www.auditguru.in 16 | P a g e