Q.Which of the following statements correctly distinguishes accounting from auditing?
(A) Accounting is periodic; auditing is continuous
(B) Accounting records and summarises transactions; auditing independently examines the records already prepared
(C) Accounting requires a Chartered Accountant; auditing does not
(D) Accounting and auditing are the same activity performed at different times

The two activities differ in exactly the opposite way from what options (A) and (C) claim, and they are certainly not the same activity as option (D) suggests.

Accounting is the ongoing, continuous process (not periodic) of recording and summarising transactions; auditing is typically the periodic exercise (not continuous) that follows it. It is auditing, not accounting, for which a statutory qualification (Chartered Accountant) is legally required in the case of a company. Since the two require different people performing structurally different work, they are not the same activity, ruling out (D).

Section g draws this distinction out in full, and it is one of this chapter's most important ideas — captured in the syllabus's own phrase, "an auditor is not an accountant."

Accounting is the process by which a business's transactions are recorded (in journals/subsidiary books), classified (posted to ledgers), and summarised (into a trial balance and final accounts) — an activity that runs continuously throughout the financial year, and is typically performed by an accountant who may be an employee of the business itself.

Auditing begins only after accounting has finished its work for a period: the auditor takes the already-prepared financial statements and independently examines them — checking supporting vouchers, evaluating internal controls, and gathering evidence — in order to form an opinion on whether those statements present a true and fair view. This is usually a periodic exercise (commonly annual), and for a company's statutory audit, the law requires the auditor to hold a specific professional qualification (Chartered Accountant status) that is not required of an ordinary accountant maintaining the books.

Checking the options: (A) reverses the correct pattern (accounting is the continuous one, auditing the periodic one). (C) also reverses the qualification requirement — it is the AUDITOR, not the accountant, for whom a CA qualification is legally mandatory. (D) is wrong because the two activities are structurally distinct — different people, different starting points, different objectives — not the same activity merely relabelled by timing. Only (B) correctly states the distinction.

A very common error is reversing which activity is 'continuous' and which is 'periodic' — remember accounting happens all year round as transactions occur, while a statutory audit is typically a periodic exercise conducted after the accounting period closes (which is also why 'post-mortem in nature' is listed as a genuine limitation of auditing in Section f).