The Multiple Choice Questions Blog

To gather sufficient and appropriate evidence, the auditor may use external confirmation requests.

For the following statement regarding external confirmation requests, select whether it is of no relevance, depends on the type of business, or is true or false.

• A positive confirmation request always asks respondents to reply to the auditor, indicating whether they agree with the information provided.

Select ONE answer:

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

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 – Positive confirmations may request that the respondent provides the balance owing as opposed to simply confirming the balance stated.
4. Not correct

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For the following description below, select whether they describe analytical review, monetary unit sampling, block selection or systematic selection.

• Alex is checking whether purchase invoices have been authorised for payment. He has selected all the November purchase invoices as his sample and has reviewed them for an authorisation signature.

Select ONE answer:

1. monetary unit sampling
2. block selection
3. systematic selection
4. analytical review

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 – Systematic selection involves selecting items using a constant interval between selections, the first interval having a random start.
3. Not correct
4. Not correct

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For the following description below, select whether they describe analytical review, monetary unit sampling, block selection or systematic selection.

• Peter is auditing trade accounts receivable. Materiality is £25,000. The sample is selected by choosing balances that contain each 25,000th £1 on a cumulative basis.

Select ONE answer:

1. monetary unit sampling
2. block selection
3. systematic selection
4. analytical review

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 – Systematic selection involves selecting items using a constant interval between selections, the first interval having a random start.
2. Not correct
3. Not correct
4. Not correct

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Which ONE of the following is the definition of an anomaly?

Select ONE answer:

1. The misstatement that the auditor expects to be present in the population
2. Control deviations, when performing tests of control, or misstatements, when performing substantive procedures
3. The maximum misstatement in the population that the auditor would be willing to accept
4. A misstatement or deviation that is demonstrably not representative of misstatements or deviations in a population

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 – The misstatement that the auditor expects to be present in the population is called the expected misstatement. Control deviations identified during tests of controls and misstatements identified during substantive procedures are collectively referred to as misstatements. The maximum error in the population that the auditor is willing to accept is called the tolerable misstatement.

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

For the statement below, select whether it is true, false, of no importance, or it depends on the size of the company with respect to test data.

• Test data can be used to help calculate ratios.

Select ONE answer:

1. True
2. Of no importance
3. False
4. It depends on the size of the company

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 – Audit software (not test data) can be used to help in the calculation of ratios.
4. Not correct

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