Question

An arrangement in which the accounting work of each individual is checked by the other member is known as_____.
A. Internal Audit
B. External audit
C. Internal check
D. Test checking

Answer 1

Hint: Audit is the inspection of various accounting books by a professional auditor followed by physical checking of inventory to make sure that all departments are following a documented system of recording transactions.

Complete answer:
An arrangement of work in which the accounting work of each individual is checked by the other member is commonly known as internal check. Routine internal checks ensure the company has the ability to survive in a competitive and cut throat business environment. It helps an organization to accomplish its objectives. Now ,let's see the options:-

A. Internal Audit- Internal Audit is a process which consists of people within a company who are vested with the responsibility of providing independent reviews of systems, business organizations, and processes which are being handled in the company and hence this is incorrect.
 B. External Audit- An external auditor performs this audit, with respect to the specified laws of the financial statements of a company, government entity, other legal entity, or organization, and is independent of the entity being audited and hence this is incorrect.
C. Internal check- Similar to other internal checks it is an accounting procedure where the routine entries for transactions are handled by many employees in such a manner that the work of one employee is cross-checked against the work of another for detection of errors, hence this is correct.
D. External check- This is similar to the internal check but the people from outside check the content. Hence this is incorrect.

Therefore, the correct answer is option C) Internal check.

Note: The main objective of internal check is to protect businesses from inefficiency, fraud, pilferage and to ensure that they provide adequate and reliable accounting information.