Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Cost Audit Total Number of Question: 40 Time: 41 Minutes All the best... Kind Regards CMA Madhuri Kashyap Profile: Click Here! Name Phone No Email Area Pincode 1. Which of the following is the primary objective of Cost Audit? Financial reporting compliance Detection of fraud Verification of cost records for efficiency Tax compliance None 2. Cost audit is governed under which section of the Companies Act, 2013? Section 143 Section 139 Section 148 Section 133 None 3. Who is responsible for appointing a cost auditor? Board of Directors Shareholders Government Chief Financial Officer None 4. Cost Audit is mandatory for which type of companies? All private companies Companies meeting specified turnover & net worth criteria All partnership firms Small companies None 5. Which institute regulates the cost audit profession in India? ICAI ICMAI ICSI RBI None 6. What is the first step in conducting a cost audit? Issuance of cost audit report Submission of cost audit report to MCA Appointment of cost auditor Conducting audit procedures None 7. The cost audit report must be submitted in which form? CRA-1 CRA-2 CRA-3 CRA-4 None 8. Which document contains the cost accounting records to be maintained by companies? CRA-1 CRA-2 CRA-3 Form AOC-4 None 9. What is the due date for submitting CRA-4 to MCA? Within 180 days from the financial year-end Within 90 days from the cost audit report date Within 30 days from the cost audit completion Within 120 days from the financial year-end None 10. Which of the following is NOT a part of cost audit scope? Verification of production efficiency Checking compliance with cost accounting standards Ensuring financial statement accuracy Identifying areas for cost reduction None 11. Which form is used for the appointment of a cost auditor? CRA-1 CRA-2 CRA-3 CRA-4 None 12. How long should cost audit records be maintained by a company? 3 years 5 years 8 years 10 years None 13. Which standard governs cost audit and assurance? Cost Accounting Standard - 101 Cost Auditing Standard - 101 Cost Audit Rule - 2021 Accounting Standard - 20 None 14. Cost audit primarily ensures compliance with which standards? Ind AS Cost Accounting Standards (CAS) GAAP IFRS None 15. What does CRA-4 deal with? Cost Audit Report Format Submission of Cost Audit Report to MCA Cost Auditor Appointment Cost Records Maintenance None 16. Which industry is generally exempt from cost audit requirements? Power generation Banking & Insurance Pharmaceutical Cement None 17. What is the minimum turnover for cost audit applicability in regulated sectors? ₹10 Crore ₹20 Crore ₹30 Crore ₹25 Crore None 18. Which companies must comply with cost accounting record rules? Only listed companies Companies meeting turnover thresholds Sole proprietorships LLPs None 19. Which of the following does NOT come under regulated sectors for cost audit? Electricity Sugar Real estate Telecommunication None 20. Cost audit is NOT applicable to which type of company? Manufacturing company with ₹35 crore turnover Service company with ₹50 crore turnover Banking company Pharmaceutical company None 21. One of the key benefits of cost audit is: Reducing tax liability Enhancing cost efficiency Ensuring compliance with IFRS Avoiding statutory audit None 22. Cost audit is helpful for which of the following? Detecting financial fraud Ensuring cost control Filing tax returns Managing foreign exchange transactions None 23. Which of the following is NOT a responsibility of a cost auditor? Checking compliance with cost accounting standards Advising on tax matters Evaluating efficiency in cost control Reporting irregularities in cost records None 24. Who approves the cost audit report? CFO Company’s shareholders Board of Directors Statutory Auditor None 25. What happens if a company fails to comply with cost audit requirements? No penalty Penalty under the Companies Act, 2013 Imprisonment for directors Audit exemption in the next year None 26. Which of the following is NOT a method used by cost auditors during their audit process? Analytical review Reconciliation of cost data Verification of internal controls Financial statement analysis None 27. Which document is generally used by cost auditors to check the accuracy of cost records? Financial statements Cost sheets Bank statements Shareholder reports None 28. What is the main purpose of variance analysis in cost auditing? To analyze operational profits To determine deviations from expected costs To calculate the net profit To calculate taxes payable None 29. What is the key focus area during the verification of cost records? Accuracy of revenue recognition Efficiency in cost management Compliance with legal tax obligations Shareholder dividend payouts None 30. Which of the following tools is used to ensure cost allocation is done properly in cost audit? Cost allocation statements Profitability analysis Bank reconciliation statements Income tax returns None 31. In a cost audit report, which statement should the auditor make regarding compliance? Whether cost accounting records are maintained as per prescribed rules Whether financial statements are accurate Whether taxation is managed properly Whether operational risks are minimized None 32. Which statement is usually included in a cost audit report? Auditor’s recommendation for future cost reduction Auditor’s opinion on financial profitability Auditor’s opinion on internal controls effectiveness Auditor’s view on management’s strategy None 33. What should a cost auditor do if they identify discrepancies in cost records? Ignore the discrepancies Report the discrepancies to the Board of Directors Inform the statutory auditor only Modify the cost records None 34. What happens if a cost auditor fails to submit the cost audit report on time? The company gets a waiver from compliance A fine is imposed on the company A penalty is imposed on the auditor The auditor’s appointment is automatically revoked None 35. In case of discrepancies in the cost audit report, what is the auditor required to do? File a complaint with the registrar Modify the audit report Make a note of discrepancies in the report Provide a clear justification for discrepancies in the report None 36. Which cost element is examined in detail during a cost audit? Income tax expense Direct and indirect costs Capital gains Shareholder equity None 37. Which of the following is a key component of the cost audit process in manufacturing companies? Production cost verification Review of financial position Checking tax liabilities Assessing management’s strategic vision None 38. What is the focus of cost audit when applied to service-oriented companies? Inventory management Efficiency in resource utilization Verification of profit margins Financial risk management None 39. What should a cost auditor do when they detect inefficient cost management practices? Alert management to take corrective actions Ignore the inefficiency and move forward with the audit Report to the external auditor Suggest improvements directly to the Board of Directors None 40. In which scenario is a cost audit report NOT required to be submitted? For companies with exempted industries For companies meeting cost audit thresholds For companies with no manufacturing operations For public sector undertakings None 1 out of 4 Great job on taking the INCOC Test! We appreciate your interest in test. Look out for results and future opportunities. Stay Connected !! Your quiz time is about to finish. Few seconds left. 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