hitechpathshala

Q. 1

The auditor has no obligation to perform any audit procedures regarding the financial statements after the date of the auditor’s report. However, when, after the date of the auditor’s report but before the date the financial statements are issued, a fact becomes known to the auditor that, had it been known to the auditor at the date of the auditor’s report, may have caused the auditor to amend the auditor’s report, the auditor shall:

Discuss the matter with management and, where appropriate, those charged with governance.

Determine whether the financial statements need amendment.

Inquire how management intends to address the matter in the financial statements.

All of the above

Q. 2

Which of the following is not an example of an event or condition that may cast significant doubt on entity’s ability to continue as a going concern:

Loss of key management without replacement

Adverse key financial ratios

Inability to pay creditors on due date

Current year profit turns to loss after providing depreciation

Q. 3

A company is engaged in business of obtaining eggs from one day old chicks. Which of the following is NOT an example of an event or condition that may cast significant doubt on the ability of the company to continue as a going concern?

Mortality of 90% of livestock of the company

Decision by govt to ban commercial rearing of birds amidst protests by activists for preventing cruelty to animals

Shifting of farm labour to respective villages due to MGNREGA scheme of Govt causing acute scarcity throughout the year

Increase in cost of feed of chicks by 20% during the year.

Q. 4

Following are examples of events or conditions that may cast significant doubt on an entity’s ability to continue as a going concern. Which of following is an example of operating event/conditions?

Adverse key financial ratios

Inability to pay creditors on due dates

Indications of withdrawal of financial support by creditors

Shortages of important supplies

Q. 5

Which of the following is incorrect:

Written representations are necessary information that the auditor requires in connection with the audit of the entity’s financial statements.

Similar to responses to inquiries, written representations are audit evidence.

Written representations are requested from those responsible for the preparation and presentation of the financial statements.

Written representations provide necessary audit evidence and also they provide sufficient appropriate audit evidence on their own about any of the matters with which they deal.

CH- 7 COMPLETION AND REVIEW

Marks: 5