Question

Consider the following activities:
1. Valuation
2. Verification
3. Vouching
The correct sequence of these activities undertaken by an auditor is :

• A. 3, 1, 2
• B. 3, 2, 1
• C. 2, 3, 1
• D. 1, 2, 3

Answer 1

The correct option is B 3, 2, 1

• An audit is undertaken in the following sequence:
  
• 1. Vouching:
  
• When the auditor checks the entries with some documents it is called vouching. Vouching is the acid test of an audit. It tests the truth of the transaction recorded in the books of accounts.
  
• 2. Verification:
  
• Verification means `proving the truth' or `confirmation'. One of the most important duties of an auditor in connection with the audit of the accounts of a concern is to verify the assets and liabilities appearing in the balance sheet.
  
• 3. Valuation:
  
• Accounting valuation is the process of valuing a company's assets and liabilities for financial reporting purposes