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CA Inter Audit of Items of Financial Statements — practice questions — page 2

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 31–49 of 49.

How is a sale on credit recorded in the journal?Read the answer and worked solution →When a customer settles a credit account, which entry is made?Read the answer and worked solution →A provision made after reviewing each individual doubtful debt is called what?Read the answer and worked solution →For tax reporting, which provision for bad debts is not an allowable deduction?Read the answer and worked solution →Selling receivables to a third party to raise cash is commonly called what?Read the answer and worked solution →The payment term Net 30 days means payment is due when?Read the answer and worked solution →A liability that depends on the outcome of a pending lawsuit is classed as what?Read the answer and worked solution →Which of these is a typical example of a contingent liability?Read the answer and worked solution →Fair presentation except for a non-pervasive material misstatement gives which opinion?Read the answer and worked solution →Which report states explicitly that no opinion is expressed?Read the answer and worked solution →When do statements fail to present fairly, with the departure affecting them overall?Read the answer and worked solution →What level of assurance does an audit opinion give?Read the answer and worked solution →If controls are weak, which work gets more weight in the audit?Read the answer and worked solution →When must the auditor perform a test of controls?Read the answer and worked solution →Hard close figures are as at 30 November; year end is 31 December. What is left to audit?Read the answer and worked solution →Why can an audit not provide absolute assurance?Read the answer and worked solution →Comparing invoice selling prices with an approved price file tests which sales objective?Read the answer and worked solution →Why do auditors often run tests of controls and substantive tests together?Read the answer and worked solution →Which body issues the International Standards on Auditing?Read the answer and worked solution →

Worked practice questions

How is a sale on credit recorded in the journal?

  1. Debit cash, credit sales
  2. Debit revenue, credit receivable
  3. Debit expense, credit receivable
  4. Debit receivable, credit revenue
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Correct answer: D. Debit receivable, credit revenue

A credit sale creates an asset (receivable) and earns income (revenue).

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When a customer settles a credit account, which entry is made?

  1. Debit cash, credit receivable
  2. Debit receivable, credit cash
  3. Debit revenue, credit cash
  4. Debit cash, credit revenue
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Correct answer: A. Debit cash, credit receivable

Cash comes in (debit) and the customer's receivable is cleared (credit).

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A provision made after reviewing each individual doubtful debt is called what?

  1. A general provision
  2. A specific provision
  3. A reserve fund
  4. A sinking fund
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Correct answer: B. A specific provision

Reviewing debts one by one gives a specific provision, unlike a flat percentage.

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