AUDITING & COST

ACCOUNTING
IMP
QUSTIONS

INDEX

SECTION 1
SECTION - 2

SECTION - 1

INTRODUCTION TO THE SUBJECT

AUDIT PROGRAMME
TYPES AND CONDUCT OF AUDIT
INTERNAL CHECK AND INTERNAL AUDIT
READING OF LEDGERS ACCOUNTS
VOUCHING
VERFICATION AND VALUATION OF ASSETS AND LIABITIES
DEPRECIATION
CAPITAL AND REVENUE EXPENDITURE AND INCOME
AUDIT IN COMPUTER ENVIRONMENT
REPORTS AND CERTIFICATES

SECTION - 2

INTRODUCTION
ELEMENTS OF COST
MATERIAL CONTROL
LABOUR CONTROL
OVERHEADS
METHODS OF COSTING
CONTRACT COASTING
PROCESS COSTING
RECONCILIATION OF COST AND FINANCIAL ACCOUNTS
MARGINAL COASTING
STANDERD COSTING

INTRODUCTION TO THE SUBJECT

ACCOUNTANTS ARE WRITTEN AND TRADING AND PROFIT & LOSS

ACCOUNTS AND BALANCE SHEET ARE PREPARED BYTHE ACCOUNTS
DEPARTMENT UNDER THE INTRUCTIONS OF THE MANEGEMENT.
HOWEVER IT IS NOT SUFFICIENT. AN INDEPENDENT PERSON SHOULD
GO THROUGH THEM AND CRETIFY THEIR CORRECTNESS. THIS IS
AUDITING.
AUDITING IS SAID TO BE IN EXISTANCE IN INDIA SINCE THE MAURYAS
AND CHANDRA GUPTAS REGIME. IT IS ALSO MENTIONED IN THE
KAUTILYAS ARTHASHSTRA. BUT ITS REAL DEVELOPMENT CAN BE
SEEN ONLY IN 19TH AND 20TH CENTURY
FIRST INDIAN COMPANIES ACT 1857 PROVIDED FOR AUDIT IT WAS
NOT MANDATORY OR COMPULSORY. THE INDIAN COMPANIES ACT
MADE AUDINTING COMPALSORY FOR THE COMPANIES ACT 1913. THIS
ACT ALSO PROVIDED FOR THE MINIMUM QUALIFICATION , RIGHETS,
DUTIES, AND THE PROCEDURE FOR THE APPOINTMENT OF THE
AUDITOR. THE PROFESSION OF THE AUDITOR GAIN MORE
IMPORTANT AFTER 1949 AS THE INSTITUTE OF CHARTERED
ACCOUNTANT WAS ESTABLISHED IN THAT YEAR.
INDIAN COMPANIES ACT 1956 PROVIDED FOR THE ADDITIONAL RULES
AND REGULATIONS IN DETAIL ABOUT THE PROFESION OF AN
AUDITOR.

Q .no 1 define the term auditing and explain its meaning.

Origin of term audit is said to be in Latin term Audier which means to listen. In the
middleages whenever any frauds or misappropriation was suspected In the books of
accounts, there was a system of appointments of an outside expert to verify the accounts.
Such expert used to first listen to what the concerned person I the accounts department or
managers has to say on the issue. At that time the scope of auditing was restricted to
detecting errors and frauds in accounts only
According to spicer and pegler auditing is an examination of the books of accounts and
vouchers of a business as will enable the auditor to satisfy himself that the balance sheet
is properly drawn up so as to give fair & true view of profit & loss for the financial period.
In Italy the double entry book include the responsibilities & duties of the accountant. The
science of auditing than slowly develop and auditor gain more important. In case of
company managers & owners are different than there was advent of banks and other
financial institution which also insisted on accounts being audited. There was increase in
social responsibilities of the government. In the beginning auditing is only checking the
whether all the money received and spent is properly recorded In the books of accounts.
Today auditor has a wider meaning. Auditor has not only to certify that the accounts are
properly maintain but also to certify the profit & loss account also.
Auditor has not only to see the arithmetical accuracy of the books of account but also he
has see that the financial statements are prepared as per the relevant legal provisions
applicable to the concern as well as on accepted accounting principles.
Thus it can be said to be examination and appraisal of the financial picture by an
independent expert. Auditing provides a safeguard to various interested parties like
shareholders, creditors etc.

DISTINGUISH BETWEEN: ACCOUNTING & AUDITING

THE WORK OF THE ACCOUNTANT IS TO RECORD THE DIFFERENT BUSINESS TRANSECTIONS

SYSTEMETICALLY IN THE BOOKS OF ACCOUNT AND VERIFY THE CORRECTNESS OF TOTALS.
FOR THIS PURPOSE HE MAY PREPARE A TRIAL BALANCE FROM TIME TO TIME LIKE SAY
EVERY MONTH. AT THE END OF THE YEAR ALSO PROFIT & LOSS ACCOUNT & BALANCE SHEET
ARE PREPARED