Audit Associate Interview Questions and Answers for Freshers

Audit risk is the risk that an auditor expresses an inappropriate opinion on financial statements.

• Audit risk is the risk that the auditor may issue an incorrect opinion on the financial statements.

• It is the risk that the auditor may fail to detect material misstatements in the financial statements.

• Audit risk is composed of inherent risk, control risk, and detection risk.

• Inherent risk is the risk of material misstatement in the absence of internal controls.

• Control risk is the ...read more

Types of leases include finance and operating leases. Verbal contracts are valid but harder to enforce. The five step approach of revenue recognition includes identification, separation, transaction price, allocation, and recognition.

• Types of leases: finance lease (capital lease) and operating lease

• Verbal contracts are valid but harder to enforce compared to written contracts

• Five step approach of revenue recognition: identification of the contract, separation of performance o...read more

Materiality refers to the significance of an item or event in relation to financial statements.

• Materiality is a concept used in auditing to determine the importance of an item or event in relation to financial statements.

• It is used to determine whether an item or event is significant enough to affect the decision-making of users of financial statements.

• Materiality is subjective and depends on the context of the financial statements and the users of those statements.

• For exampl...read more

VLOOKUP is a function in Excel used to search for a value in a table and return a corresponding value.

• VLOOKUP stands for 'Vertical Lookup'

• The formula syntax is =VLOOKUP(lookup_value, table_array, col_index_num, [range_lookup])

• Example: =VLOOKUP(A2, B2:D10, 3, FALSE) - this will search for the value in cell A2 in the range B2:D10 and return the value in the 3rd column

• The range_lookup parameter can be either TRUE (approximate match) or FALSE (exact match)

The three accounting standards are GAAP, IFRS, and GASB.

• GAAP (Generally Accepted Accounting Principles) is used in the United States

• IFRS (International Financial Reporting Standards) is used globally in many countries

• GASB (Governmental Accounting Standards Board) is used for government entities

Store ledger is a record of all transactions related to inventory in a store.

• Store ledger tracks the movement of goods in and out of the store.

• It helps in maintaining accurate inventory levels and preventing stockouts.

• The ledger includes details such as item description, quantity, date of transaction, and cost.

• Regularly updating the store ledger is essential for effective inventory management.

• Example: A store ledger may show that 100 units of a product were received on Januar...read more