What is the primary objective of an audit?

To identify all errors and frauds in the financial statements.

To ensure compliance with tax regulations.

To determine the real earning capacity of a business.

In auditing, what is the role of an auditor with regards to errors and frauds?

Auditors guarantee that financial statements are completely free from errors and frauds.

Auditors are responsible for uncovering all errors and frauds.

Auditors must exercise reasonable care and skill in detecting errors and frauds.

Auditors are not concerned with errors and frauds in financial statements.

What does the term "integrity" mean in the context of auditing principles?

Being free from bias and impartial.

Being a specialist in internal control.

Having knowledge of accounting standards.

Which of the following is not a limitation of auditing?

Dependence on explanation by others.

Detailed checking of every transaction.

Non-detection of errors or frauds.

Which principle emphasizes the auditor's responsibility to plan their work effectively and coordinate the tasks to be performed?

Integrity, objectivity, and independence.

In the case of a joint-stock company, what assurance does an audit provide to shareholders?

Assurance of future profitability.

Assurance of a clean audit report.

Assurance of smooth business affairs and the safety of their investment.

Assurance of no errors or frauds in financial statements.

What is the significance of an audit for lenders and creditors?

It helps them calculate purchase consideration.

It assures them of future profitability.

It assists in determining income tax liabilities.

They can rely on audited financial statements for credit decisions.

Which principle stresses the importance of obtaining sufficient appropriate evidence to form an opinion on the financial information?

Integrity, objectivity, and independence.

What is the main purpose of investigation in the context of auditing?

To detect all errors and frauds in financial statements.

To ensure compliance with tax regulations.

To determine the true and fair view of financial statements.

To ascertain essential facts about a specific matter.

Which advantage of auditing is related to the valuation of goodwill and the settlement of accounts in a partnership firm?

Detection of errors and frauds.

Determination of income tax liabilities.

Assurance of smooth business affairs.

Evidence of proper management and settlement of accounts.

Auditing Concepts- 2 Free MCQ Practice Test with Solutions

	Auditing and Secretarial Practice 55 videos\|53 docs\|24 tests

	Auditing and Secretarial Practice 55 videos\|53 docs\|24 tests

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