Cost Audit MCQs 2026

A key aspect of Material cost audit testing is that it involves

1. A ignore production records ✓
2. B only audit office rent ✓
3. C only sales commission ✓
4. D verification of raw material consumption and pricing ✓

Capacity utilization verification in the context of Cost Audit refers to

1. A cost audit may examine idle capacity and under-absorption ✓
2. B capacity irrelevant to cost audit ✓
3. C only financial audit examines capacity ✓
4. D never review production volumes ✓

Cost Audit: Cost audit working papers can be defined as

1. A no papers required ✓
2. B only client marketing slides ✓
3. C document examination of cost ledgers and production reports ✓
4. D destroy immediately after visit ✓

Regarding Qualification of cost auditor in Cost Audit, the accurate view is

1. A any person without qualification ✓
2. B only medical doctor ✓
3. C chartered accountant or cost and management accountant as prescribed ✓
4. D only architect ✓

A key aspect of Cost audit report is that it involves

1. A same as tax audit report always ✓
2. B only verbal report to foreman ✓
3. C cost auditor reports on cost statements and compliance with cost accounting records ✓
4. D only social media post ✓

Related party transactions in cost audit is best described as

1. A ignore all internal transfers ✓
2. B transfer pricing between divisions scrutinized ✓
3. C only external sales matter ✓
4. D no documentation of transfer prices ✓

In Cost Audit, Cost audit and pricing regulation primarily means

1. A never used for pricing ✓
2. B only for advertising budget ✓
3. C regulated utilities may link tariffs to audited costs ✓
4. D only for HR hiring ✓

Which statement about Cost audit vs financial audit is correct

1. A identical scope always ✓
2. B cost audit focuses on cost records financial audit on FS overall ✓
3. C cost audit replaces financial audit ✓
4. D financial auditor never considers cost ✓

In Cost Audit, Wastage and spoilage audit primarily means

1. A wastage never recorded ✓
2. B reviewing norms and actual wastage in production ✓
3. C audit ignores scrap sales ✓
4. D only audit finished goods dispatch ✓

In Cost Audit, Cost auditor appointment primarily means

1. A all shops always require cost audit ✓
2. B required for companies engaged in specified industries per SECP ✓
3. C never required in Pakistan ✓
4. D appointed by employees union only ✓

Cost Audit: Inventory valuation in cost audit can be defined as

1. A only count units without cost ✓
2. B ignore WIP entirely ✓
3. C only retail FIFO always without test ✓
4. D work-in-progress and finished goods cost build-up verified ✓

Regarding Standard costing review in Cost Audit, the accurate view is

1. A comparing actual costs to standards and analyzing variances ✓
2. B standards never used in industry ✓
3. C variances ignored in audit ✓
4. D only financial ratios without cost sheets ✓

In Cost Audit, Energy and fuel cost audit primarily means

1. A never material in Pakistan industry ✓
2. B significant for cement textile and power intensive industries ✓
3. C only audit paper clips ✓
4. D ignore utility bills ✓

Cost Audit: Cost audit in sugar industry can be defined as

1. A historically regulated sector with detailed cost scrutiny ✓
2. B never subject to cost audit ✓
3. C only services sector regulated ✓
4. D only IT companies require cost audit ✓

Regarding Export cost certification in Cost Audit, the accurate view is

1. A never needed for exports ✓
2. B audited cost may support duty drawback or pricing claims ✓
3. C only import duties matter ✓
4. D customs ignores cost statements ✓

SECP cost audit directions in the context of Cost Audit refers to

1. A SECP has no role in cost audit ✓
2. B only FBR issues cost directions ✓
3. C only ICAP sets all law ✓
4. D regulator may issue directions on cost audit scope and filing ✓

In Cost Audit, Cost audit primarily means

1. A only audit of share register ✓
2. B only trademark review ✓
3. C systematic verification of cost records and cost statements ✓
4. D only employee leave records ✓

Cost Audit: Cost accounting records order can be defined as

1. A no records required for manufacturing ✓
2. B legal requirement to maintain prescribed cost accounting records ✓
3. C only marketing expenses records ✓
4. D only email archives ✓

Which statement about Labour cost audit is correct

1. A only audit CEO salary always ✓
2. B ignore timekeeping ✓
3. C only marketing staff labour ✓
4. D reviewing wage rates overtime and labour hour records ✓

Overhead allocation audit is best described as

1. A accept any allocation without test ✓
2. B examining basis for allocating indirect costs to products ✓
3. C only variable costs exist ✓
4. D overhead never audited ✓