The Multiple Choice Questions Blog

For the following statement regarding audit data analytics, select whether it is of no relevance, depends on the type of business, or is true or false.

• Significant time must always be spent tailoring data analytics procedures to the individual audit client to achieve good results.

Select ONE answer:

1. True
2. No relevance
3. False
4. Depends on the type of business

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Data analytics is not about spending time tailoring the procedures to the client. A major advantage of data analytics is that they are standardised.
4. Not correct

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For the following statement regarding audit data analytics, select whether it is of no relevance, depends on the type of business, or is true or false.

• Data analytics allows auditors to investigate complex data using simple visualisation techniques.

Select ONE answer:

1. False
2. True
3. No relevance
4. Depends on the type of business

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – A key element of data analytics is the ability to process very large and complex data into simple visual representations, which can help auditors to spot trends they might otherwise have missed.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

For the procedure below, select the option that best describes the auditor’s test as performed.

• The auditor, calculating for himself the amount accrued where an invoice straddles the year-end

Select ONE answer:

1. Testing primarily for the cut-off of accruals
2. Testing primarily for completeness of accruals
3. Testing primarily for completeness of payables
4. Not a relevant procedure for payables

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Recalculating the amount accrued is primarily a test of the cut-off because it focuses on the split between the period before and after the year-end. It also tests completeness, but this is not its primary aim.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

For the procedure below, select the option that best describes the auditor’s test as performed.

• Reviewing the payments made to suppliers after the year end

Select ONE answer:

1. Testing primarily for completeness of payables
2. Testing primarily for completeness of accruals
3. Testing primarily for the existence of accruals
4. Not a relevant procedure for payables

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Reviewing post year-end supplier payments is a test not often conducted – all it could really tell the auditor is whether the entity has the cash to pay its suppliers. This procedure is not to be confused with post year-end receipts from receivables, which is an important test of debt recoverability.

This work is licensed under a Creative Commons Attribution 4.0 International License.

For the procedure below, select the option that best describes the auditor’s test as performed.

• Reviewing post year-end invoices for amounts which relate to the reporting period

Select ONE answer:

1. Not a relevant procedure for payables
2. Testing primarily for completeness of payables
3. Testing primarily for completeness of accruals
4. Testing primarily for the existence of accruals

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Reviewing post year-end invoices begins with the invoices and traces them back to the accounting system. This is an attempt to find expenses which have been omitted from the system.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.