Cost Audit MCQs

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Cost audit is the audit of cost records. It is the verification of the correctness of cost accounts and of the adherence to the cost accounting plan
Cost Audit MCQs

Cost Audit

Cost audit is the audit of cost records. It is the verification of the correctness of cost accounts and of the adherence to the cost accounting plan. Here on MCQs.club we have prepared easy Multiple-Choice Questions (MCQs) on Cost Audit that fully cover MCQs on Cost Auditing of accounts, soc 2 cost audit, meaning and definition. These MCQ on audit cost are useful for Professional accountancy exams, Business management exams and Competitive exams.

  1. What is cost audit?
    1. Cost audit is the audit of cost records
    2. It is the verification of the correctness of cost accounts and of the adherence to the cost accounting plan.
    3. Cost audit is verification of the cost of production of any product, service or activity on the basis of accounts maintained by an enterprise.
    4. All of the above
  1. Which of the following statement is correct?
    1. The cost auditor is neither conducting investigative audit nor forensic audit, which could detect any concealment of revenue.
    2. The cost auditor role is only to analyze the costs associated with the product.
    3. A cost auditor verifies the basic elements of cost via material costs, labour cost and overheads ensuring that production cost has been arrived at as per principles of cost accounting.
    4. All of the above
  1. Which of the following are the objectives for which cost audit is undertaken?
    1. To establish the accuracy of costing data.
    2. To ensure that cost accounting principles are governed by the management objectives and these are strictly adhered in preparing cost accounts.
    3. To reduce the amount of detailed checking by the external auditor if effective internal cost audit system is in operation.
    4. All of the above
  1. Benefits of cost auditing include:
    1. Highlights wastages, losses and inefficiencies
    2. Ensure efficient management of resources
    3. It helps industry to prepare advanced budget plans
    4. All of the above
  1. Which of the following statement is correct regarding planning of cost audit?
    1. Cost audit should he planned with professional care, recognizing that circumstances may exist to cause the cost statements to be materially misstated.
    2. The cost audit should be so programmed and conducted as to provide reasonable assurance that the cost information is free of material misstatement.
    3. Both A&B
    4. None
  1. Which of the following persons shall NOT be appointed as cost auditor of a company:
    1. A person who has been appointed as auditor of the company for the respective period
    2. A person who is, or at any time during the preceding three years was a director, officer or in the employment of a director
    3. Both A&B
    4. None
  1. Which of the following particulars relating to wages and salaries be included in Cost Auditor’s Report to the Director of the company?
    1. Total wages and salaries paid
    2. Total man-days of direct labour available and actually worked
    3. A brief explanation for variances in item
    4. All of the above

  1. The cost auditor evaluates the total amount of any royalty/technical aid fee payable for the year and should also look into whether:
    1. The agreement is legally in force
    2. The agreement is in line with the laws and regulations
    3. The amount is in accordance with the agreement
    4. All of the above
  1. Which of the following persons shall not be appointed as auditor of a company?
    1. A person who has been appointed as auditor of the company
    2. A spouse of a director of the company
    3. A body corporate
    4. All of the above
  1. The cost auditor shall make out a report with sixty (60) days of his appointment to the directors along with a statement of capacity utilization and stock-in-trade.
    1. True
    2. False

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