Correct Answer:
D. Familiarity threat
Over time the auditor may become too sympathetic to the client's interests, a familiarity threat.
November 13, 2026 · Accounting and Finance MCQs, Auditing MCQs
A long association of the same audit partner with a client mainly creates which threat?
Related MCQs
Total variable cost:
A.
Remains constant regardless of activity
B.
Changes in direct proportion to changes in activity level
C.
Decreases as activity increases
D.
Is always zero
Correct answer is:
B. Changes in direct proportion to changes in activity level
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Performance (value-for-money) audit examines the:
A.
Accuracy of the trial balance only
B.
Economy, efficiency and effectiveness of an entity's operations
C.
Tax liability only
D.
Share price movements
Correct answer is:
B. Economy, efficiency and effectiveness of an entity's operations
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EBIT is Rs. 200,000 and interest is Rs. 50,000. The degree of financial leverage is approximately:
A.
4.0
B.
0.75
C.
1.33
D.
1.25
Correct answer is:
C. 1.33
Do you agree with this answer?
Tax-to-GDP ratio is calculated as:
A.
GDP divided by tax revenue
B.
Total revenue divided by total expenditure
C.
Tax revenue divided by GDP, expressed as a percentage
D.
Public debt divided by GDP
Correct answer is:
C. Tax revenue divided by GDP, expressed as a percentage
Do you agree with this answer?
Tracing from source documents (e.g. goods received notes) to the accounting records mainly tests:
A.
Occurrence
B.
Rights and obligations
C.
Presentation
D.
Completeness
Correct answer is:
D. Completeness
Do you agree with this answer?
The basic accounting equation is:
A.
Assets = Liabilities + Equity
B.
Assets = Liabilities - Equity
C.
Assets + Liabilities = Equity
D.
Equity = Assets + Liabilities
Correct answer is:
A. Assets = Liabilities + Equity
Do you agree with this answer?
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