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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