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CA Inter Audit of Items of Financial Statements — practice questions

Explore 49 free Audit of Items of Financial Statements questions in CA Inter Auditing. Open each question or exercise to read its content, reference answers and available explanation.

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Audit of Items of Financial Statements questions and exercises with answers

Showing questions 1–30 of 49.

Which audit procedure involves watching an employee count products in a warehouse?Read the answer and worked solution →A reply sent to the auditor by a third party about an assertion is called what?Read the answer and worked solution →Re-adding the totals of a ledger to check arithmetic is which audit procedure?Read the answer and worked solution →Which procedure has the auditor redo a client process to confirm it was done correctly?Read the answer and worked solution →Speaking to people inside or outside the client to learn specific facts is called what?Read the answer and worked solution →An auditor examines the client's records, or records from outside companies about the client. This is what?Read the answer and worked solution →Investigating unexpected variances in financial and non-financial information is the work of what?Read the answer and worked solution →An inventory count watched on 31 December mainly shows stock held at which time?Read the answer and worked solution →For audit evidence to be appropriate, it must be both relevant and what?Read the answer and worked solution →As the risk of material misstatement rises, how much evidence should an auditor collect?Read the answer and worked solution →Which evidence is generally most reliable?Read the answer and worked solution →What advantage do audit data analytics give over traditional sampling?Read the answer and worked solution →Which formula expresses audit risk in terms of its three components?Read the answer and worked solution →The chance that audit procedures fail to detect a material error or fraud is what?Read the answer and worked solution →Which risk arises when weak internal control fails to prevent or detect a misstatement?Read the answer and worked solution →In which entity would control risk be assessed as higher?Read the answer and worked solution →Detection risk may arise from sampling error or from what other kind of error?Read the answer and worked solution →Stock-taking is best described as the physical verification of what?Read the answer and worked solution →The annual year-end stock-taking is often done in whose presence?Read the answer and worked solution →Which method is a less disruptive alternative to a full physical inventory?Read the answer and worked solution →A system that tracks receipts and use of stock to compute quantity on hand is called what?Read the answer and worked solution →Which control principle bars one person from authorising, recording and holding inventory?Read the answer and worked solution →Periodic counting is usually done for which kind of items?Read the answer and worked solution →For expensive items, what stock-taking interval is preferred?Read the answer and worked solution →Legally enforceable claims for goods supplied on credit but not yet paid are called what?Read the answer and worked solution →How are accounts receivable shown in a balance sheet?Read the answer and worked solution →The allowance for doubtful accounts is what type of account?Read the answer and worked solution →Which bad debt method is not permissible under Generally Accepted Accounting Principles?Read the answer and worked solution →Classifying debts by their age and risk is the basis of which approach to the bad debt provision?Read the answer and worked solution →A bad debt provision based on a percentage of net credit sales follows which method?Read the answer and worked solution →

Worked practice questions

Which audit procedure involves watching an employee count products in a warehouse?

  1. Confirmation
  2. Observation
  3. Recalculation
  4. Reperformance
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Correct answer: B. Observation

Watching staff perform the count is observation, the procedure used for stock-taking attendance.

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A reply sent to the auditor by a third party about an assertion is called what?

  1. Inquiry
  2. Inspection
  3. Confirmation
  4. Observation
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Correct answer: C. Confirmation

A direct written reply from an outside party is the definition of confirmation evidence.

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Re-adding the totals of a ledger to check arithmetic is which audit procedure?

  1. Observation
  2. Inquiry
  3. Confirmation
  4. Recalculation
Show answer and solution

Correct answer: D. Recalculation

Checking that mathematical procedures such as additions are correct is recalculation.

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More Auditing topics

Ethics and Terms of Audit EngagementsAudit Strategy, Planning and ProgrammeRisk Assessment and Internal ControlAudit EvidenceAudit ReportAudit DocumentationCompletion and ReviewNature, Objective and Scope of Audit