Practical Auditing

1. A system in which the work of one person is automatically checked by another person is called as:

• Internal Check

• Internal Control

• Internal Audit

• Interim Audit

Answer explanation

An 'Internal Check' system ensures that one person's work is verified by another, enhancing accuracy and accountability. This distinguishes it from 'Internal Control' and 'Internal Audit', which have broader scopes.

Audit done at the close of the financial year is called:

• Periodical audit

• Continuous audit

• Balance sheet audit

• Special audit

1. Objects of Internal Check are:

• To minimize errors and frauds

• 1. To prevent errors and frauds

• To allocate duties and respobsiblities

• All of the above

Answer explanation

The objects of Internal Check aim to minimize, prevent errors and frauds, and allocate duties and responsibilities. Therefore, the correct answer is 'All of the above' as it encompasses all these objectives.

is a valuable part of Internal Control

• 1. Internal Audit

• Internal Check

• Test Check

• Routine Check

Answer explanation

Internal Check is a crucial component of Internal Control as it ensures that transactions are processed accurately and helps in detecting errors or fraud, thereby enhancing the reliability of financial reporting.

1. A good Internal Check system:

• To reduce the liability of an auditor

• Reduces the work of an auditor

• Reduces the responsibility of an auditor

• All of the above

Answer explanation

A good Internal Check system helps in reducing the auditor's liability, work, and responsibility. Therefore, the correct choice is 'All of the above' as it encompasses all the benefits of an effective Internal Check system.

1. The system of Internal Check is based on the principle of:

• Division of labour

• Unity of command

• Unity of direction

• Authority

Answer explanation

The system of Internal Check relies on the principle of Division of labour, which ensures that tasks are distributed among individuals, enhancing efficiency and accountability in the process.

1. While making payment for purchases are to be checked by a clerk:

• Account Sales

• Invoices

• Cash Receipt

• None of these

Answer explanation

Invoices are essential documents that detail the items purchased and the amount due. They must be checked by a clerk during payment to ensure accuracy and proper record-keeping.

1. When goods are returned to suppliers, a should be obtained from them:

• Debit Note

• Credit Note

• Account Slip

• 1. None of these

Answer explanation

When goods are returned, a Credit Note is issued by the supplier to acknowledge the return and adjust the accounts. This document serves as proof of the return and is essential for accurate record-keeping.

1. Goods returned by customers will be entered in:

• • Goods Inwards Book

• • Purchases Returns Book

• • Goods Outward Book

• • Above all the above books

Answer explanation

Goods returned by customers are recorded in the Goods Inwards Book, as this book tracks items coming back into inventory. The Purchases Returns Book is not the correct choice for recording returns.

1. Internal check is a kind of:

• Complete audit

• Division of work

• 1. Partial audit

• 1. Partial audit

Answer explanation

Internal check is a method of ensuring accuracy and accountability within an organization, achieved through the division of work. This helps prevent errors and fraud by separating duties among different individuals.