Title AUDIT BRIDGE TEST 4 ANS (1).pdf ✅

CA INTER – AUDITING BRIDGE TEST - 4 SUGGESTED ANSWERS [1] MCQ PART – A 1. Correct Answer: B. Send external confirmations to selected debtors Explanation: SA 505 (External Confirmations) emphasizes obtaining third-party confirmations to verify balances like trade receivables. It provides evidence on existence and possible impairment (non-recoverability). 2. Correct Answer: C. At cost or net realizable value, whichever is lower Explanation: As per Accounting Standard 2, inventory should be valued at lower of cost or NRV to ensure that unrealized losses are recognized, maintaining prudence in accounting. 3. Correct Answer: C. No depreciation is charged until the asset is ready for use Explanation: Depreciation begins only when an asset is available for use. As per AS 10 (PPE), if the asset is not yet ready, depreciation is not charged, even if purchased. 4. Correct Answer: C. Ensure it is disclosed in the notes to accounts Explanation: As per AS 29 (Provisions, Contingent Liabilities and Contingent Assets), if a liability is possible (not probable), it should not be provided for but must be disclosed in the financial statements. Auditor ensures proper disclosure as per SA 501. 5. Correct Answer: A. Deposits should have been insured or secured as per rules Explanation: Section 78 of the Multi-State Co-operative Societies Act requires deposits accepted by such societies to be insured or secured to protect depositors’ interests. Failure to do so is a compliance violation and audit concern. 6. Answer: B. Report the delay to the Registrar of Co-operative Societies Explanation: Under State Co-operative Societies Acts, the auditor must report to the Registrar if the