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National College of Business Administration & Economics

Sub Campus, Bahawalpur


4th Semester [B.COM]

Class:

03-06-2016
Subject:
Audit
Hassan Ali
Term:
Final Term

Date:
Instructor: Mr.
Max Marks:

Time Allowed: 15 Min


Name: _____________________

Roll #

10
Total
____________

Section A
Objective
Multiple Choice Questions: (10 *1)
1. Which of the following is more appropriate audit response:
a) Test of Controls more thoroughly inform management about internal control
problems.
b) Adopt a substantive approach and inform management about the internal
control problems
c) Continue with the planned audit approach and inform management about the
internal control problems.
2. Which of the following does not form part of understanding the entity:
a) Identifying accounting policies
b) Gaining knowledge of the control environment
c) Understanding the regulatory environment
d) Issuing the engagement letter
3. Which of the following approaches to auditing will normally involve
looking at the higher amount of documentation?
a) An audit approach using substantive test
b) An audit approach using test of controls.
4.
a)
b)
c)
d)

Financial statement risk depends upon ?


Inherent and control risk
Control and detection risk
Inherent, control and detection risk
Audit and control risk

5. Choose true or false:


Work perform by the auditor will decrease control risk
a) True
b) False

National College of Business Administration & Economics


Sub Campus, Bahawalpur

6. Which of the following would not contribute to inherent risk?


a)
b)
c)
d)

Complex transaction
Poor supervision of accounting staf
A new computerized accounting system
Poor staf turnover

7. There is an error in the draft financial statement. Which of the


following will reduce the audit risk?
a) Low control risk
b) Low detection risk
c) Low inherent risk
8. Which of the following is not a component of internal control?
a)
b)
c)
d)

Narrative notes
Control procedures
Control environment
Risk assessment

9. Which of the following is not effective in testing non-current addition?


a)
b)
c)
d)

Tracing back to non-current assets authorization form.


Recalculating depreciation charge
Physical inspection of the new assets
Tracing additions to purchase invoices.

10.
Which of the following will not provide evidence about the cost
of unit of Inventory in a manufacturing company?
a) Hourly labor rate
b) Raw material invoices
c) The number of units of inventory

4th Semester [B.COM]

Class:
03-06-2016

Date:

National College of Business Administration & Economics


Sub Campus, Bahawalpur
Subject:
Audit
Mr. Hassan Ali
Term:
Final Term
Name:

Instructor:
Max Marks:
25
Total Time Allowed: 1 hr
Roll # ____________

_____________________

Section B
Short questions
1. What is Engagement Letter?
2. What is mean by understanding the entity in the Audit Planning?
(2)
3. Write down three (3) types of Business risk?
4. Define Inherent Risk?
5. Write down the name of Financial Statements Assertions?
(3)
6. Write down two main aspects of yearend Inventory Count?
7. Write down two stages where Analytical Procedures are used?
(2)

Section C
Long Question
QNO 1. Write down the Inherent Limitations of Internal Controls?
(5)
QNO 2. Audit Risk= Inherent risk*control risk*detection risk.
Explain it.
1.

(5)

(2)

(2)
(2)

(2)

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