Q21.........

Role of management in preparation of financial statements where conditions exist for inability of an entity as a going concern include

a.

Evaluation of the judgement made by them

b.

Window dressing of financial statements

c.

Making an assessment of the entitys ability

d.

Not disclosing the uncertainties

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Q22...............

The risk that the auditor expresses an inappropriate audit opinion

a.

Control Risk

b.

Detection Risk

c.

Inherent Risk

d.

Audit Risk

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Q23............

An auditor need not modify his opinion in the situation where:

a.

Financial statements are prepared in accordance with the applicable financial reporting framework

b.

Financial statements as a whole are not free from material misstatement

c.

Financial statements prepared in accordance with the requirements of a fair presentation framework, but do not achieve fair presentation.

d.

The auditor is unable to obtain sufficient appropriate audit evidence

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Q24.....

An auditor should obtain reasonable assurance about the financial statements in order to express an opinion. How do you interpret the term reasonable?

a.

The level where the audit risk is at minimum

b.

The level at which the management of an entity is willing

c.

The level of at which auditor is willing to take highest risk

d.

The level required by the regulation

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Q25.......

An auditor collects the evidences to make his conclusions and form an opinion. His opinion is based on the evidences. Most of the evidences are in nature.

a.

Neither Persuasive nor conclusive

b.

Persuasive

c.

Conclusive

d.

Both Persuasive and conclusive

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Q26.........

The term financial statements does not include

a.

Statement of revenue and expenses.

b.

Statement of changes in owners equity.

c.

Statement of funds flow

d.

Statement of cash flows.

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Q27.......

Which of the following assumptions is false about going concern?

a.

The entity will continue its operations

b.

Management has no intention to windup

c.

Assets are realized during normal course

d.

Prepares financial statements on liquidation basis

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Q28.........

From the following, identify a condition that may not be considered as fraud.

a.

Incentive to misappropriate assets

b.

Rationalizing the fraudulent act

c.

Incentive or pressure to commit fraudulent financial reporting

d.

Misapplication of accounting principle without knowledge

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Q29....

When material uncertainty exists and an entity has not made adequate disclosures, an auditor may express:

a.

an adverse opinion

b.

a qualified opinion

c.

an unmodified opinion

d.

either qualified or adverse opinion

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Q30.....

Analytical procedures include evaluations of financial information. Consider the following situations and identify which of the following are included in the analytical procedure. I. Checking the arithmetic accuracy of the financial information. II. Observing the process of determining the values of specific assets. III. Comparing the sales revenues with other items of information for determining the fairness.

a.

II Only

b.

III Only

c.

I only

d.

I, II and III