Q.1 Which of the following is a key objective of a bank audit?
Verification of inventory
Verification of loan accounts
Verification of wage sheets
Verification of fixed assets
Explanation - In a bank audit, the primary focus is on verifying loan accounts, deposits, and other financial transactions to ensure compliance and accuracy.
Correct answer is: Verification of loan accounts
Q.2 In a hospital audit, which of the following is most important to verify?
Medicine inventory control
Sales invoices
Shareholder records
Factory overheads
Explanation - Hospitals handle sensitive stock like medicines, and auditing medicine inventory control ensures no misuse or wastage.
Correct answer is: Medicine inventory control
Q.3 What is the primary concern in a cooperative society audit?
Checking income tax returns
Ensuring fair distribution of surplus
Reviewing export procedures
Examining advertising costs
Explanation - In cooperative society audits, auditors ensure that the surplus is distributed equitably among members according to society rules.
Correct answer is: Ensuring fair distribution of surplus
Q.4 Which specialized audit is most relevant for NGOs?
Performance Audit
Tax Audit
Cost Audit
Stock Audit
Explanation - NGOs are often audited through performance audits to ensure funds are used for intended purposes effectively.
Correct answer is: Performance Audit
Q.5 What does a stock audit primarily verify?
Employee attendance
Physical existence of inventory
Share capital
Tax liabilities
Explanation - A stock audit focuses on confirming that the recorded stock physically exists and matches the accounts.
Correct answer is: Physical existence of inventory
Q.6 Which audit is compulsory for listed companies under SEBI regulations?
Forensic Audit
Internal Audit
Management Audit
Cost Audit
Explanation - Listed companies are required to conduct internal audits as per SEBI rules to strengthen governance.
Correct answer is: Internal Audit
Q.7 What is the focus of a forensic audit?
Detecting fraud and irregularities
Verifying income tax filings
Monitoring production cost
Checking employee benefits
Explanation - Forensic audits are specialized audits conducted to detect fraud, misappropriation, or financial crimes.
Correct answer is: Detecting fraud and irregularities
Q.8 Government audits are primarily carried out by which institution in India?
RBI
CAG
SEBI
NABARD
Explanation - In India, government audits are carried out by the Comptroller and Auditor General (CAG).
Correct answer is: CAG
Q.9 Which of the following is checked in an insurance company audit?
Claim settlement procedures
Loan repayments
Plant maintenance
Raw material quality
Explanation - Insurance audits focus on claims handling and settlement to ensure fairness and compliance with policies.
Correct answer is: Claim settlement procedures
Q.10 Audit of charitable trusts mainly ensures:
Profit maximization
Compliance with trust deed
Raw material pricing
Marketing expenditure efficiency
Explanation - Charitable trust audits ensure that operations and finances comply with the trust deed and applicable laws.
Correct answer is: Compliance with trust deed
Q.11 Which audit evaluates efficiency in the use of resources?
Social Audit
Efficiency Audit
Stock Audit
Tax Audit
Explanation - Efficiency audits measure how well resources are used in producing results at minimum cost.
Correct answer is: Efficiency Audit
Q.12 In hotel audits, what is a crucial area of verification?
Room revenue and occupancy records
Shareholder equity
Debenture redemption
Bank loans
Explanation - Hotel audits focus on room revenue, occupancy records, and food and beverage sales for accuracy.
Correct answer is: Room revenue and occupancy records
Q.13 What is the key focus in a tax audit?
Compliance with Income Tax Act
Share valuation
Asset disposal
Customer feedback
Explanation - Tax audits ensure businesses comply with the provisions of the Income Tax Act and report income correctly.
Correct answer is: Compliance with Income Tax Act
Q.14 Social audits are mainly conducted to:
Check shareholder returns
Measure social impact of projects
Verify bank balances
Control material wastage
Explanation - Social audits measure how effectively organizations or governments have implemented programs for social welfare.
Correct answer is: Measure social impact of projects
Q.15 In educational institution audits, which of these is key?
Verification of tuition fee collection
Checking export licenses
Evaluating factory overheads
Loan restructuring
Explanation - Education audits ensure proper collection of fees, use of grants, and compliance with rules.
Correct answer is: Verification of tuition fee collection
Q.16 Which type of audit is carried out to detect window dressing in accounts?
Tax Audit
Forensic Audit
Internal Audit
Efficiency Audit
Explanation - Forensic audits are specialized to detect frauds like window dressing or misrepresentation of accounts.
Correct answer is: Forensic Audit
Q.17 Which is a primary feature of a management audit?
Checking compliance with accounting standards
Evaluating efficiency of management decisions
Verifying tax liabilities
Stock valuation
Explanation - Management audits assess how effective management policies and decisions are in achieving goals.
Correct answer is: Evaluating efficiency of management decisions
Q.18 Which of the following is NOT a specialized audit?
Forensic Audit
Government Audit
Statutory Audit
Cost Audit
Explanation - Statutory audits are mandatory general audits, while specialized audits cover specific areas.
Correct answer is: Statutory Audit
Q.19 Audit of public sector undertakings in India is conducted by:
Internal auditors only
CAG of India
Private firms exclusively
Tax consultants
Explanation - The Comptroller and Auditor General (CAG) audits public sector undertakings to ensure transparency.
Correct answer is: CAG of India
Q.20 Which audit focuses on environmental impact of activities?
Forensic Audit
Environmental Audit
Management Audit
Efficiency Audit
Explanation - Environmental audits measure the impact of organizational activities on the environment and compliance with laws.
Correct answer is: Environmental Audit
Q.21 In a manufacturing company, cost audit is conducted to:
Check compliance with cost accounting standards
Verify income tax returns
Evaluate employee satisfaction
Audit loan agreements
Explanation - Cost audits ensure companies follow cost accounting standards and control cost-related inefficiencies.
Correct answer is: Check compliance with cost accounting standards
Q.22 What does an energy audit evaluate?
Energy consumption and efficiency
Shareholder voting rights
Employee leave records
Dividend policies
Explanation - Energy audits assess energy use and recommend measures for conservation and efficiency.
Correct answer is: Energy consumption and efficiency
Q.23 Which of these is a mandatory audit under the Companies Act, 2013 for certain companies?
Social Audit
Cost Audit
Efficiency Audit
Management Audit
Explanation - The Companies Act, 2013 mandates cost audit for certain specified companies in regulated industries.
Correct answer is: Cost Audit
Q.24 Forensic audits are often used in:
Fraud investigation
Budget planning
Tax rebates
CSR monitoring
Explanation - Forensic audits are designed specifically to investigate fraud and legal disputes.
Correct answer is: Fraud investigation
Q.25 In IT audits, the auditor primarily examines:
System security and data integrity
Shareholder dividend policy
Plant layout
Loan restructuring agreements
Explanation - IT audits assess system controls, data security, and integrity of digital information.
Correct answer is: System security and data integrity