Cash Transaction Audit MCQs

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

1. : An auditor conducts a surprise check on the pay day the day wages and salaries are paid. The primary purpose of these audit procedures is:
(A) To ensure that there are no ghost workers
(B) To ensure the casual employed are authorized by the supervisor
(C) To test procedures for distributing pay
(D) To obtain understanding of internal control system

2. : The creditors, balance sheet, generally, have credit balance. Debit balance may be due to:
(A) Advance paid against an order
(B) Goods returned
(C) Wrong debit to supplier account
(D) Any of these

3. : Which of the following activities should not be done by same department?
(A) Maintaining personnel records and approving changing in wages rates
(B) Proposing pay roll summary and disbursement of wages
(C) Making salary statements and, filing tax returns
(D) Comparing, time clock records with time reports prepared by supervisors

4. : Vendors accepted by management before purchase department performs an order. If this is not done then which situations may arise?
(A) Purchases could be made from whose product may not be good
(B) Purchases may be made from related parties without management’s knowledge
(C) Purchases could be made from vendors who may have offered price purchases to vice-president
(D) Any of these

5. : The auditor is most likely to examine related party dealings very carefully while vouching:
(A) Credit sales
(B) Sales returns
(C) Credit purchases
(D) Cash purchases

6. : In case of untaken wages, the auditor should observe whether:
(A) The amount has been submitted in a separate bank account
(B) Deposited with the cashier
(C) Held in a safe deposit box
(D) All of these

7. : Which of the following would prevent double payment of the same voucher?
(A) The person signing the cheque should cancel the supporting documents
(B) Cheques should be signed by at least two persons
(C) The date of payment of vouchers of similar nature should be the same
(D) All of the above

8. : The principal reason for the auditor to examine supplier’s statements at balance sheet date is to obtain evidence that:
(A) The supplier exists
(B) There are liabilities not unrecorded
(C) Recorded purchases actually occurred
(D) To link creditors with cashbook entries

9. : In case of vouching, the auditor is least likely to examine approval by proper expert in case of:
(A) Bad debts written off
(B) Sales return
(C) Purchase return
(D) Discount allowed to customers as per organizational policy