You have been proposed as auditor of a company. What is the first step that you should take?
(A) Obtain the client’s permission to communicate with the existing auditor
(B) Obtain the existing auditor’s working papers
(C) Obtain a copy of the company’s most recent board minutes
(D) Obtain a copy of the existing auditor’s letter of engagement
Which one of the following may auditors NOT perform for their client?
(A) Taking management decisions
(B) Preparation of accounting records
(C) Preparing tax computations
(D) Advising on weaknesses in the internal control systems
Which of the following are fundamental ethical principles for professional accountants? 1 Competence 2 Compliance 3 Integrity 4 Objectivity
(A) 1, 2 and 3 only
(B) 1, 3 and 4 only
(C) 2, 3 and 4 only
(D) 1, 2 and 4 only
An auditor should not accept a loan on favourable commercial terms from an audit client because of the threat to his or her independence. The threat would be a___________?
(A) Self-interest threat
(B) Self-review threat
(C) Advocacy threat
(D) Familiarity threat
Which of the following statements is INCORRECT?
(A) An auditor may serve on the board of directors of an audit client.
(B) An auditor who is an immediate family member of the director of an audit client must not be assigned to the audit team.
(C) Purchasing goods from an audit client on normal commercial terms does not create a threat to the auditor’s independence.
(D) An auditor who was recently a director of an audit client must not be assigned to the audit team for that client.
The amount invested by the proprietor to start the business is called:
(A) Capital
(B) Business
(C) Drawings
(D) All of them
Obligation of the Business are known as___________?
(A) Liabilities
(B) Revenues
(C) Expenses
(D) Assets
Double entry means______________?
(A) Entry in two sets of books
(B) Entry at two ends
(C) Entry at two dates
(D) Entry for two aspects of the transaction
The person to whom goods are sold on credit is called___________?
(A) Buyer
(B) Seller
(C) Debtor
(D) Creditor