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CMA Intermediate · Corporate Accounting and Auditing · Nature, Scope, Objectives and Significance of Auditing

Which of the following is a feature that distinguishes auditing from accounting?

Auditing begins where accounting ends. Accounting records, classifies and summarises transactions into financial statements, whereas auditing is the independent examination of that output and the expression of an opinion. The other statements wrongly swap the functions or the persons performing them.

  1. AAuditing records transactions in the journal and ledger, while accounting verifies them
  2. BAuditing begins where accounting ends, as it examines the results of the accounting processCorrect
  3. CAuditing is performed by the entity's accountant, while accounting is done by an outsider
  4. DAuditing summarises transactions into financial statements, while accounting reports an opinion on them

Explanation

Accounting identifies, records, classifies and summarises transactions. Auditing starts once the accounts are prepared and examines them independently. The other options reverse the roles of the two functions.

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