Ch – 4/5

Vouching and verification

Meaning:
Vouching or “to vouch” means testing the truth of entries appearing in the primary
books of accounts. Vouching is a process of examining the evidences in order to
ascertain the accuracy and authenticity of entries in the books of accounts. It
refers to inspection by auditor of documentary evidences supporting a
transaction such as invoices, statements, receipts, correspondence, minutes and
contracts etc.(vouchers), with a view to ensure the accuracy of entries in the
books of accounts.

It is the technique used by the auditors to judge the authenticity of the entries
appearing in the financial statement. Procedure and accuracy followed for
performing vouching decides the success and failure of the auditing. Vouching is
an important tool in the hands of auditor to check transactions and the success
of the auditor. Vouching is said to be the essence of auditing. Vouching is the
method of critically examining the documents which support the entries in the
accounts.

Definition: According to Dicksee, “Vouching consist of comparing entries in books

of accounts with documentary evidences in support thereof”.

According to Joseph Lancaster “vouching is a device used to prove that various

transactions for the period are fairly, truly and sincerely reflected in the books
of accounts.”
The following are the objectives of the vouching:

1. To ensure that all the transactions took place during the financial year for
the business only (not for personal use) appropriately recorded in the books
of accounts with true and fair evidence.
2. To check the accuracy of the totalling and carrying forward amount
recorded in the books.
3. To ensure that the person responsible for the business has verified his
records or not.
4. To make the financial records free from malpractices/ frauds.
5. To make sure that law has been followed while preparing financial records.
6. To ensure that the transactions comply with the provisions of law e.g.
companies Act, income tax act etc

1
Importance of vouching:

While performing an audit, the auditor is totally dependent on the documents

presented by the responsible person for the business during the whole financial
year.

Thus, Vouching helps the auditors to ascertain whether the entries in the book
are true and fair, this is the basic objective of auditing. Vouching provides audit
evidence in respect of following matters:

1. Occurrence: Vouching helps the auditor to ascertain whether the transaction

has actually occurred.
2. Amount: Vouching helps the auditor to see whether the transaction is recorded
for the right amount.
3. Relevant entries: Vouching helps the auditors to see whether the entries
recorded in the books are relevant or not, i.e., they relate to the concern and
to the current accounting year. Through vouching, the auditors can ascertain
whether the entries about the income, expenses, assets, etc., are relevant.
4. As per standards: Vouching helps the auditor to verify whether the item is
accounted as per the recognized accounting standards, policies and practice.
5. As per law: Vouching complies that transaction is according to law. E.g.,
companies law, Income Tax Act.
6. Disclosure: Vouching enables the auditor to ensure that the item is properly
disclosed in the final accounts as required by schedule VI of Companies’ Act
1956.

Points to be considered for vouching:

Voucher is a document which authorizes an entry into books of accounts. In

addition, the voucher may also act an authorization of carrying out actual
transaction requiring entry in book of accounts.
1. All vouchers should be consecutively numbered and filed properly.
2. Each voucher should be dated and such date should fall within the financial
year under audit.
3. Voucher should be addressed to the client and should relate to business of
the client. He should check the description of transaction.
4. The amount shown on vouchers should be calculated accurately and amount
in words and in figures should match.
5. The signature of the official authorizing the transaction is there on the
voucher.

2
 6. Vouchers are properly affixed with a revenue stamp as per the
requirements of law.
7. Vouchers originating outside the business are genuine.
8. In case of missing vouchers, the auditor should ask for the reasons for the
same and should rely on appropriate evidence, in case of a missing purchase
invoice; he may obtain a duplicate copy from the client.
9. The auditor should not seek help of the client's staff while vouching.

Techniques of vouching:
1. checking the voucher:
auditor should check date, name of concern, serial number, description of
transaction, amount, signature etc on the proof/ documentary evidence

2. checking the supporting documents

auditor should check other external supporting documents. Signature,
stamping (paid, received, approved) are done

3. checking the entries in the books

auditor should check the books of accounts in respect of date of entry,
head of account, quantity and amount are properly recorded.

Verification:
Verification means the inspection of assets appearing in financial statements,
whether the assets are according to legislation or not. Verification of assets and
liabilities are done to confirm the following −
• Existence
• Ownership
• Proper valuation
• Possession
• Freedom from encumbrances(charge)
• Proper recording

Definition:
Verification is defined by spicer and pegler as “an inquiry into the value, ownership
and title, existence and possession and presence of any charge on the assets.”

Objectives of Verification
Following are the objectives of Verification −
• Confirmation about the existence of assets through physical verification.
• Legal and official documents relating to assets are checked to confirm the
ownership of assets.

3
 • It is confirmed that assets are free from any charge of lien.
• Proof regarding proper valuation of assets.
• To confirm that assets are properly accounted for in the books of
accounts.

Techniques of verification:
Verification of assets or liability may be done by using the techniques of physical
inspection, observation or confirmation.
1. inspection: inspection means physical inspection of assets e.g. counting of
cash in cash box, taking inventory, of closing stock etc. or inspection of
documents e.g. document of title, supplier invoices, loan agreement etc.

2. observation:
it means witnessing the inspection of assets done by others. Thus, auditor
may not himself take(counting) inventory, but only observe that the
inventory is being taken by the staff of the concern in a right manner.

3. confirmation:
it means obtaining written evidence from outside parties regarding
existence of an assets e.g. obtaining balance confirmation from
debtors/suppliers/ bankers.

Difference between Vouching and Verification

PARTICULA
VOUCHING VERIFICATION
RS

Meaning Vouching is a process of Verification is a process to verify

examining the documentary the assets and liabilities of the
evidences of transactions. business

Basis Vouching is concluded based on Verification is concluded based on

the feasible narrative information, counting, and
evidences like invoice, observation.
receipts, cheques, etc

Examination Examining of profit and loss Balance sheet is examined in

accounts is done in vouching verification process.
process.

Time of Vouching is a never-ending Verification is done at the end of

conduct process and conducted the financial year.
through-out the financial year.

4
 PARTICULA
VOUCHING VERIFICATION
RS

Purpose Vouching is done to check the Verification is done to check out

accuracy of the evidences the existence of the assets
provided by the party. and liabilities appearing in the
balance sheet.

Items Vouching covers incomes, Verification covers only assets and

checked expenses, assets purchases, liabilities as on the date of balance
sold, liabilities incurred /paid sheet
during the year.

Techniques Vouching involves checking of Verification of assets or liability

vouchers, supporting may be done by using the techniques
documents and entries in the of physical inspection, observation
books or confirmation.

How will u vouch the following?

Vouching of Income/Receipt
General consideration
Of all the company assets, cash is the most liquid and therefore, potentially the
most attractive to defalcators. Because of its high liquidity, the cash accounts
should always receive the auditor’s careful attention. Therefore, it is the duty of
the auditor to check that cash transactions entered in the books are correctly
recorded and all required procedures are followed properly.
To verify cash transactions, it is necessary:
1. To verify the system of internal control
2. To check whether all transactions are correctly recorded
3. There is documentary evidence for every transaction.
4. Proper disclosure of these transactions is made in financial statements.
⚫ Procedure for audit of receipt

Checking receipt and entry in the books of accounts:

1. Name of client: Auditor should check that name of the client in the cash
book and name of the client on the receipt is same.
2. Date of vouchers: Auditor should see that date on the voucher and date
of entry in the cash book are same and fall in the current accounting year
3. Serial number of vouchers: It should be in continuation.
4. Amount in words and figures: Auditor has to confirm that amount written
on the voucher in words and in figures is the same he also has to ensure
that the same amount is entered in the cash book.

5
 5. Head of account: Auditor should ensure that the entry of the voucher is
made under proper head of account. It should be same in the voucher and
in the books of account.
6. Signature of person preparing voucher: This helps to fix the
responsibilities for any errors in the voucher
7. Signature of the receiver: This is the proof that the amount was actually
received by the concern. The signature should be on a revenue stamp if the
amount exceeds Rs. 5000.

A) Cash Sales

Cash Sales are sales of goods and services where cash is collected at the time
goods or service is supplied. Cash sales include cash and GST collected for such
things as user or registration fees for conferences, field trips, camps or
memberships. Cash Sales units need to comply with the Cash Sales Procedure
and Cash Receipt and Banking procedures.

Payment for Cash Sales can be in the form of currency (bank notes and coin),
cheques, bank drafts, money orders, credit and debit cards, or Electronic Funds
Transfer (EFT).

Vouching of Cash Sales

Cash sales can be vouched by the auditor in the following way:

1. Internal Check: Auditor should evaluate the internal check and if it is proper
system then he should rely on it.

2. Checking of Memos: Auditor should check the cash sales memos and compare
it with the daily summaries of salesman and cashier.

3. Entry in Cash Book: Auditor should also check the figures of the salesman
and cashier summaries entry in the cash book.

4. Checking of Cash Register: If cash register is used, auditor should check the
total daily rolls with the entries in the cash book.

5. Checking of Cash Book: Auditor should compare the cash book with the
general ledger.

6. Checking of Price Lists: Auditor should obtain and verify it price lists and
other instructions by the authorize persons regarding the cash sale.

6
B) Sales Return

(i) Examine the accounting basis for such transactions with reference to
corresponding Debit Note. The relevant correspondence may also be
examined.

(ii) Verify by reference to relevant corresponding record in goods inward book or

the stores records. Further, the figures in these documentary evidences
should be compared with the original invoices for rates and other charges and
calculation should also be checked.

(iii) Examine in depth to eliminate the possibility of fictitious sales returns for
covering bogus sales recorded earlier when such returns outwards are in
substantial figure either at the start or end of the accounting year.

(iv) Cross-check with reference to original invoices any rebates in price or

allowances if any given by buyers on strength of their Debit Notes.

C) Rental Receipt

(i) Check the copies of the bill issued to the tenants by reference of copies of
the tenancy agreements and bill of charges paid by the landlords on behalf of
the tenants.

(ii) The amount collected from the tenants on account of the rent should be
checked by the reference to receipt issued to them.

(iii) At the end, the register should be scrutinized to find amount or rents which
are not recorded and are considered bad or irrecoverable, for deciding
whether these should be written off.

(iv) Verify the particulars of total accommodation available for being let out in
different building or belonging to the client.

Vouching of Expenditure

General Considerations

In any business, cash transactions forms the largest bulk of transactions.

However, there is maximum scope for frauds in these transactions. Therefore,
it is duty of the auditor to check that cash transactions entered into the books
are correctly recorded and all required procedures are followed properly.

To verify cash transactions, it is necessary:

7
 1. To verify the system of internal control

2. To check whether all transactions are correctly recorded

3. There is documentary evidence for every transaction.

4. Proper disclosure of these transactions is made in financial

statements.

Procedure for Audit of Payments

Checking vouchers and entry in the books of accounts:

1. Name of client: Auditor should check that name of the client in the cash
book and name of the client on the voucher is same.

2. Date of vouchers: Auditor should see that date on the voucher and date
of entry in the cash book are same and fall in the current accounting year

3. Serial number of vouchers: It should be continuous.

4. Amount in words and figures: Auditor has to confirm that amount written
on the voucher in words and in figures is the same he also has to ensure
that the same amount is entered in the cash book.

5. Head of account: Auditor should ensure that the entry of the voucher is
made under proper head of account. It should be same in the voucher and
in the books of account.

6. Signature of person preparing voucher: Once voucher is prepared, it has

to be signed immediately by the person preparing it. This helps to find out
the person who made error preparing the voucher.

7. Signature of authorized by the proper officer having authority to do it:

It should bear signature of that officer. This proves that entry is valid and
genuine.

8. Signature of the Payee: Voucher should have signature of the payee. This
is a proof that the amount was actually received by the client.

A) Purchases:

1. Supporting documents: Purchases can be either in cash or on credit. Cash

purchases should be verified with (a) cash memos or (b) invoice received from
supplier

8
2. Name of client: Name of client, i.e., name of the concern for whom purchases
are made should be same on invoices, purchase day book as well as on any other
supporting document.

3. Date: Like the name, date of invoices, purchase day book and any other
supporting document should be same

4. Serial Number: Serial numbers on purchase vouchers should be continuous

and should tally with those entered in purchase register.

5. Amounts: Amounts written on vouchers in words in figures should match. They

should tally with amount entered in the books of account as well as with any
other supporting document.

6. Quantity: Quantity entered in the purchase book should tally with supporting
document, i.e., delivery challan, transporter’s bill, octroi receipt, entry in the
stock books etc.

7. Signatures on vouchers: The purchase vouchers must be signed by.

(a) Authorized officer of the client.

(b) Person who prepares the voucher and

(c) Person making entry in purchase day book.

This will help in recognizing at what point and by whom error or fraud is made.

8. Signature and stamp of the client: The purchase bill received from the client
should have signature and stamp or seal of the client.

9. Errors and frauds: Auditor should ensure that there are no frauds and errors
in the books as well as in the invoices. There are no errors of omission as well
as commission.

B) Purchase Return

(i) Examine debit note issued to the supplier which in turn may be confirmed by
corresponding credit note issued by the supplier acknowledging the same. The
relevant correspondence may also be examined.

(ii) Verify by reference to relevant corresponding record in goods outward book

or the stores records. Further, the figures in these documentary evidence
should be compared with the supplier’s original invoices for rates and other
charges and calculation should also be checked.

9
(iii)Examine in depth to eliminate the possibility of fictitious purchase returns for
covering bogus purchases recorded earlier when such returns outwards are in
substantial figure either at the beginning or end of the accounting year.

(iv)Cross-check with reference to original invoices any rebates in price or

allowances if any given by suppliers on strength of their Credit Notes.

C) Wages and Salaries:

Vouching of Salaries: While vouching salaries auditor should pay attention to the
following points:

1. The auditor should check the salary book.

2. He should check the salaries actually paid during the year.

3. He should compare the salary book and cheque drawn for a particular month.

4. He should compare salary book with the cash book

5. Auditor should see that sign of each employee are available on the book.

6. Auditor should also examine, terms and conditions of the officers employment.

7. Revenue receipts should also be checked by the auditor.

8. Auditor should also verify that all the deductions like income tax, and other
funds have been credited in the irrespective accounts.

9. He should also check that unpaid salaries are taken into account for that
period.

10. Auditor should also check that increment given to the employee was due or not.

Vouching of Wages:

To vouch the wages following points must be considered:

1. Checking of Internal System: Auditor should satisfy himself testing the

system of internal check that internal control system is sufficient to provide
a reasonable protection against errors.

2. Checking of Calculations: Auditor should apply the test check to see that all
the calculations are correct.

3. Checking of Wages Sheet: Auditor should examine the time work wages and
piece work wages thoroughly.

10
4. Computing System: Auditor should check that wages computing paying system
is sound or not.

5. Nature of Payment: The nature of payment in both the cases (time and piece
of work) must be checked by the auditor that it is actually in practice or not.

6. Same Cash Paid and Drawn: It should be also checked by the auditor that
amount paid should be same which is drawn.

7. Checking of Names: Auditor should check that payment has been made to
those, employees whose names are given. He should check that there should
be no dummy worker in them.

8. Proper Signature: He should check that wages sheets should be properly

authorized and signed by the reasonable officer.

9. Signature Verification: Auditor should verify signature and thumb impressions

of workers by using the test check. He can compare with previous month.

10. Unpaid Wages: He should check that all unpaid wages are taken into account
or not.

11. Deductions: Auditor should also check that deductions like income tax are
properly made in their relative heads.

D) Insurance Premium

1. Documents to be seen (Insurance Policy/Cover Note): Examine the insurance

policy/cover note and note aspects like – (a) asset covered by the policy; (b)
amount of premium; (c) time period of insurance, etc.

2. Bonus: See whether “No Claim Bonus”, whether applicable, has been granted
in the policy to the insured.

3. Payment vouchers: Verify the payment vouchers and trade the payment
entries into the blank statement. Compare the same with receipt issued by the
insurance company.

4. Arrangement with the bank: Examine cases of insurance premium payments

where insurance policy is taken out by arrangement with the bank, e.g., in case
of machineries and other assets obtained by way of bank loan.

11
5. Staff insurance policy records: Where insurance premium relates to staff,
examine whether the same has been properly recovered monthly/periodically
from their pay bills.

6. General ledger/financial statements: Scrutinize the ledger and see whether

proper accounting entries have been passed in respect of prepaid insurance as
at the beginning of the year/unexpired insurance premium at the end of the
year, etc.

How will you verify the following?

A) Verification of Copyright

Copyright provides legal protection and legal rights to an author by which

the publication of his work by another is prohibited. Copyright remains
with the author for lifetime and even 50 years after his death.

1. The Auditor should examine the agreement between the author and
the publisher.
2. If there are numbers of copyright with the same publisher. Auditor
should ask for the schedule of copyrights.

B) Verification of Freehold Land and Building

1. Auditor should examine the title deed of the land and building.
2. Land and building shown in the books should be according to the title
deed.
3. Profit or loss on sale of it should be duly adjusted in the account.
4. Any addition to it should be carefully examined by the Auditor.

C) Verification of Mortgage Property

1. The Auditor should confirm that there should be no second or third

mortgage on it.
2. The Auditor should obtain certificate from mortgagee that title deed
is in his possession.

12
 3. The Auditor cannot be held responsible if there is any defect of title.
The Auditor can only verify that title deed apparently in order and in
the name of client.
4. If Auditor feels necessary he can obtain certificate from legal advisor
about the validity of title deed of the client.

D) Verification of Freehold Land

• Freehold land is a non-depreciable asset, hence it will be shown at cost.

• Cost includes legal charges, registration fees, purchase price and broker
commission, etc.

• Payment made to improvement trust or Municipal Corporation for water,

sewerage, road, development charges, etc. it will also be included in the
cost of the freehold land.
• If the basis of valuation of it is market value or realizable value, it should
be clearly mentioned in the balance sheet.

E) Verification of Leasehold Property

There should be separate accounting for freehold and leasehold property.

Leasehold property is acquired for fix duration on lease. The Auditor should
consider the following −
1. Inspection of lease agreement for value and duration.
2. Lease agreement should be registered with the registrar.

3. Terms and condition of the lease should be properly complied for.

4. The Auditor should examine the last receipt of rent to ensure the lease
agreement is in continuation without any break due to nonpayment of
rent.

F) Verification of Current Assets

The verification and valuation of a few important current assets, cash and bank
balance and sundry debtors.

A. Cash-in-hand

1. Cash-in-hand is verified by actual counting of cash. Cash-in-hand should

be verified at the close of the business or on the date of the balance
sheet.

13
 2. Counting of cash must be done in the presence of cashier. If physically
verification of cash is not feasible for an Auditor due to branch located
abroad or in remote area, the Auditor should ask the cashier to deposit
all his Cash-in-hand in bank account on the last date.
3. It is the primary duty of an Auditor to verify the cash-in-hand and in case
of non-verification, the Auditor will be held responsible for breach of his
duty.
4. If there is heavy cash balance in hand at any time, the Auditor should
immediately inform the management beforehand.
5. If the cashier is made accountable for payment to employees or others,
the Auditor should carefully verify the same.

B. Cash at Bank

The Auditor needs to consider the following points for verification of cash at
bank −
• The Auditor should prepare a bank reconciliation of account as on date.
With the help of it, the Auditor will clearly come to know the status about
the cheque issued but not yet presented in the bank and cheques
deposited in the bank but not yet cleared. There are many kinds of frauds
which are detectable through preparation of bank reconciliation of
account.
• The Auditor should obtain different certificates from banks for different
types of accounts like current account, fixed deposit account, savings
account, overdraft account or cash credit account, etc.

• The Auditor should obtain a letter of confirmation of bank balances

directly from banks.
• The Auditor should compare the bank balance as per the bank book and
the pass book.
• If payments are deposited in foreign banks under exchange control
regulation it should be verified by the Auditor.

C. Sundry Debtors

The Auditor is concerned with obtaining sufficient audit evidence in regarding

to the following −
1. All amounts are recorded in respect of outstanding debtors as at date of
Balance sheet.

14
 2. Valuation of debtors is appropriate and properly applied.
3. That all the debtors are disclosed, classified and described in accordance
with recognize accounting policies and practices.
The verification process of the debtors involves the following −

Examination of Records

1. Auditor should satisfy himself about the validity, accuracy and

recoverability of debtors’ balance.

2. Excessive discount allowed or bad debts written off should be verified.

Direct Confirmation Procedure

• Direct communication with debtors is the best way to ascertain whether

the balances are accurate, genuine and undisputed.

• Debtors from whom confirmation of balances is required, the method of

requesting confirmation is to be determined by the Auditor.
• Confirmation procedure may be carried out within a reasonable period
from the end of the year.
• Replies received from debtors should be carefully gone through and in
case, where balances do not agree, client should be asked to investigate.

• The Auditor must pay special attention to those balances for which
confirmation is not received. They might be fictitious or made to conceal
a fraud.

Steps for Verification

1. Book debts can be verified by the books of accounts and those should be
supported by sale documents.
2. Book balances should be sent to debtors directly for confirmation. It will
establish the existence of book debts.
3. Ownership of book debts can be verified with the sales documents and the
sales ledger.

4. Debtors should be enquired about any type of dispute with customers

about discount, claim etc.

15
Verification of Liabilities

The verification and valuation of liabilities −

A.Trade Creditors

Auditor should take the following important steps for the verification and
valuation of Trade Creditors −
1. Auditor should collect schedule of creditors and that should tally with
ledger balances.

2. Purchase ledger should be checked and verified with purchase register,

purchase invoices and debit notes etc.

3. Auditor should verify the discount received or receivable from

creditors.
4. Auditor should minutely check the purchase of first month and last
month of the financial year to avoid any possibility of booking purchases
of current year to next year or last year purchase to current financial
year.

5. Auditor should pay special attention on any unpaid amount stands in

ledger of creditor since long. It might be possible that amount has
misappropriated by the any official and balance stands as it is in books
of accounts.
6. Confirmation of balances should be done directly by the Auditor and if
there is any kind of discrepancy that might be sorted out.

7. Auditor should carefully study the hire purchase agreement to verify

the purchases made on the basis of Hire-Purchase.

B. Loans:
The Auditor should verify the following important points for verification and
valuation of Loans −

1. The Auditor should verify the amount of loan, type of loan, rate of
interest and repayment terms, etc.
2. He should collect and examine the agreement and certificate from bank
in case loan is granted by any Bank or financial institutions.
3. He should obtain balance confirmation from party from whom loan is
accepted by the organization other than bank.
4. Interest calculation should be duly checked by the Auditor according
to agreement.

16
 5. Amount of interest due but not paid during the current financial year
should be duly accounted for in books of accounts and should be shown
as current liabilities.
6. In case of company, the Auditor examines the borrowing power,
register of charges and created charge should be registered with the
Registrar of Companies.

Fill in the blanks

1. Verification proves the existence, ownership and title of assets.

2. Vouching is done after original entry in the books of accounts.

3. Verification and valuation are done at the end of the financial year.

4. Vouching is done by Senior Auditor and Audit Clerk.

5. Verification and valuation are done by the Auditor himself.

6. Bonafide vouchers are sufficient evidence for vouching

7. Verification includes physical verification of title deeds and receipt of

payment, etc.

8. Verification can be defined as “an inquiry into the value, ownership and
title, existence and possession and presence of any charge on the assets.”
9. Vouching involves checking of vouchers, supporting documents and entries
in the books.

10. Verification of assets or liability may be done by using the techniques of

physical inspection, observation or confirmation.

11. Auditor should examine the title deed of the land and building.
12. The Auditor should obtain a letter of confirmation of bank balances
directly from banks.
13. Balance sheet is examined in verification process.

True/ false:

1. verification means testing the truth of entries appearing in the primary

books of accounts. (false)
2. vouching means the inspection of assets appearing in financial statements.
(false)

17
 3. Vouching is the method of critically examining the documents which
support the entries in the accounts.(true)
4. Verification technique is used by the auditors to judge the authenticity of
the entries appearing in the financial statement. (false)
5. Verification is done at the end of the financial year.(true)
6. Vouching is a never-ending process and conducted through-out the financial
year. (true)
7. Process of checking the evidence of the entries called vouching. (true)
8. All vouchers should be consecutively numbered and filed properly.(true)
9. Verification helps the auditor to ascertain whether the transaction has
actually occurred.(false)
10. Name of the client in the cash book and name of the client on the receipt
should not be the same.(false)
11. Serial number of vouchers should be continuous. (true)

Match the following

Sr. Column A Sr. Column B
No No.

A Vouching I Debit notes issued to supplier.

B Sales II Salary register
C Amount iii Process of checking the evidence of the
entries
D Salary Iv Cash memo
E Purchase return V amount in words and in figures should
match.

Ans: a (iii), b (iv), c (v), d (ii), e (i)

MCQs:

1. Vouching is done by Senior Auditor.

a) Junior clerk
b) Senior auditor
c) Audit assistant
d) Accountant

2. Vouching is done after original entry in the books of accounts.

a) Ledger posting
b) Casting

18
 c) Balancing
d) Original entry

3. observation refers to witnessing the inspection of assets done by others.

a) Confirmation
b) observation
c) inspection

4. Profit and loss account examination is done in vouching process.

a) Balance sheet
b) Profit and loss a/c
c) Trial balance

5. Which of the point is not to be considered while checking a voucher?

a) Name of party
b) Serial number of voucher
c) Credit period of payment
d) Accounting entry

6. In case of sales return, the auditor should check.

a) Credit notes and delivery challans.

b) Whether cash has been repaid to the client
c) Purchase invoices and goods received notes.
d) Credit notes and goods received notes.

7. The auditor does not have to check the following while auditing salaries or
wages:

a) Calculation of the salary

b) Whether the calculation was verified by department heads
c) Whether dues like PF, PT, TDS have been deducted and deposited
d) Payment has been made to all the employees on first of the month

8. Which of the following can be accepted as a supporting document?

(a) Invoice/Challan
(b) Debit note/Credit note.
(c) Emails/letters.
(d) All of the above.

19