When testing a company's cost accounting system, the auditor uses procedures that are primarily designed to determine that
A)quantities on hand have been computed based on acceptable cost accounting techniques that reasonably approximate actual quantities on hand.
B)physical inventories agree substantially with book inventories.
C)the system is in accordance with generally accepted accounting principles and is functioning as planned.
D)costs have been properly assigned to finished goods, work-in-process, and cost of goods sold.

Question

Quizplus · Accepted Answer

The primary objective of a cost accounting system is to properly assign costs to finished goods, work-in-process, and cost of goods sold. Therefore, the auditor's procedures should focus on determining whether costs have been properly assigned.

When Testing a Company's Cost Accounting System, the Auditor Uses