Auditing MCQs Past Papers

By: Prof. Dr. Fazal Rehman | Last updated: May 21, 2025

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1. : The numerator of the rate of return on total assets ratio is equal to:



2. : Cheque is always crossed by:



3. : An agreement without consideration is:



4. : Dishonored cheque means:



5. : Books of original entry are called:



6. : The World Bank has been derived from?



7. : Which account is suitable for business community?



8. : The objective of central bank is:



9. : The State Bank of Pakistan was inaugurated by:



10. : Commercial Banks following: creates the



11. : A cash sale of merchandise should be recorded in the:



12. : A trader with a bank account wants to make monthly payments for a trade journal. What is the most suitable payment method?



13. : Which service is not available to bank customers through ATMs?



14. : Which sources of finance are most suitable for ABC Corporation, a large manufacturer facing cash flow problems?



15. : Using credit means that the customer:



16. : Which form of credit ensures a laptop becomes the customer’s property?



17. : What services can customers receive through telephone banking?



18. : What is a current account at a commercial bank?



19. : What is the meaning of the term “limited liability”?



20. : A company raises finance by issuing debentures. The debenture holders are entitled to:



21. : A contract comprises of:



22. : An agreement is void ab initio is called:



23. : Which of the following is an offer?



24. : A specific offer can be accepted by:



25. : What is the purpose of a bank slip?



26. : Consideration must move from:



27. : Incapacity to contract may be due to the absence of legal formalities:



28. : For preparing balance sheets, prepaid expenses are shown as part of:



29. : Quantum meruit means:



30. : Each party to a contract is both promisor and promisee in the case of:



31. : Income Tax Ordinance 2001 was promulgated on:



32. : Normal tax year starts from:



33. : Income from property is taxable under:



34. : A person shall be resident if he spends the following days in Pakistan:



35. : Unpaid and oral expenses are called:



36. : The rates of tax are specified in:



37. : Employer’s contribution in case of Government well-prepared fund is:



38. : Income Tax Appellate Tribunal is appointed by the:



39. : There can be no loss under the head:



40. : Revenues can be defined as:



41. : The objectivity code requires that:



42. : A liability in the amount of Rs. 500 is paid in cash, which of the following is true:



43. : An owner withdraws Rs. 300 each from the business. Which of the following is true?



44. : An expense is experienced that will be paid for the next month. Which of the following is true?



45. : A customer is billed for services rendered. Which of the following is true?



46. : The amount due from a customer who was billed last month is collected. Which of the following is true?



47. : Which one of the following accounts will most likely be included in accrual-type adjusting entries?



48. : The revenue recognition principle states that:



49. : What is the proper year-end adjusting entry for a 1-year Rs. 720 insurance policy purchased on June 1 and debited to prepaid insurance?



50. : A company collected a year’s rent in advance on Oct. Which of the following is true?



51. : Which of the following items is a current asset?



52. : When interest earned but not yet collected is accrued at year-end, the proper adjusting entry includes a:



53. : The operating cycle is:



54. : Which one of the following accounts would usually have a credit balance?



55. : Which one of the following accounts would usually have a debit balance?



56. : The entire amount Rs.1,200 was credited to unearned revenue. The proper adjusting entry at the Dec 31 year-end would include:



57. : Which of the following does not appear on a worksheet?



58. : Which of the following indicates that a company earned a net income for the period?



59. : Balance sheet accounts:



60. : It is useful to make reversing entries for:



61. : What is the year-end adjusting entry on Dec 31 for Rs. 3,600 rent collected in advance on Nov. 1 and credited to rental revenue?



62. : Net income plus operating expenses is equal to:



63. : When purchase merchandise is returned, a credit would be made to:



64. : A cash payment journal would not include a:



65. : A customer returns merchandise that was sold on account. The account has not been paid. This transaction should be recorded in:



66. : On what type of bank account may a trader draw cheques?



67. : When posting the column totals of the cash payments journal, a debit should be posted to:



68. : An internal document indicating the quantity and specification of goods needed and to request that the company acquire them is called:



69. : One of the weaknesses of the direct write-off method is that:



70. : Shazaib Company receives a 10% Rs.15,000 note receivable from Habib Company. The note is due in one month. The maturity value of the note is:



71. : Which of the following inventory cost methods is most appropriate for a merchandise inventory with a relatively small number of unique items and a high cost per item?



72. : The inventory method that assigns the most recent costs to cost of goods sold is:



73. : In periods of rising prices, the inventory method that results in the highest net income is:



74. : The lower of cost or market rule for inventory is justified by the:



75. : Which of the following is an example of a capital expenditure?



76. : The time period over which an intangible asset should be amortized is:



77. : An advantage of a partnership form of business organization is:



78. : Partnership liquidation occurs when:



79. : When a limited partnership is formed:



80. : Which of the following is not possessed by common stockholders of a corporation?



81. : What is the credit to common stock when a corporation issues 2000 shares at Rs. 32,000 with a stated value of Rs. 10 per share?



82. : The par value per share of common stock represents:



83. : When a stock subscription at a price above par is recorded, which of the following accounts would be credited?



84. : When common stock is issued in exchange for a non-cash asset, the transaction should be recorded at:



85. : How is treasury stock shown on the balance sheet?



86. : If preferred stock has dividends in arrears, the preferred stock must be:



87. : Which of the following is not classified as paid-in capital on the balance sheet?



88. : An appropriation of retained earnings:



89. : When a small stock dividend is declared, which of the following accounts is credited?



90. : Which of the following increases?



91. : The method of payment exchange depends on:



92. : Which of the following generally is the most useful in analyzing companies of different size?



93. : Common stockholder’s equity ratio is equal to:



94. : Quick assets include which of the following?



95. : All of the following are true of product costs except:



96. : Which of the following cost is not a period cost?



97. : Total manufacturing costs for a period include all of the following costs except:



98. : The total cost of units completed from work in process is transferred to which of the following accounts?



99. : The amount of money in the account of an account holder is called:



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