The Multiple Choice Questions Blog

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.

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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

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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 include real data and dummy data.

Select ONE answer:

1. False
2. True
3. Of no importance
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 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

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 are a type of substantive procedure.

Select ONE answer:

1. False
2. True
3. Of no importance
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 1

1. Correct – Test data are used to test controls.
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 whether the auditor will be testing primarily for an overstatement or primarily for an understatement.

• The auditor calculates for himself the warranty provision and compares their figure to the balance stated in the statement of financial position

Select ONE answer:

1. Primarily for the overstatement of provisions
2. Primarily for the understatement of provisions
3. Primarily for the overstatement of warranty provision
4. Primarily for the understatement of warranty provision

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 auditor’s primary concern when testing assets is that they may be overstated, whereas the concern with liabilities is that they may be understated. Performing the calculation on the warranty provision and then comparing that figure with the balance stated, is testing a liability and therefore testing for understatement.

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