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 main purpose of testing a company's cost accounting system is to ensure that costs have been properly allocated to finished goods, work-in-process, and cost of goods sold. This is essential to determine the accuracy of the company's financial statements and reports. Options A and B are related to inventory management, while option C is related to compliance with accounting principles, but these are not the primary focus when testing the cost accounting system.

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