When an auditor tests a client's cost accounting system,the auditor's tests 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 are in substantial agreement 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 work in process, finished goods, and cost of goods sold.

Question

Quizplus · Accepted Answer

The primary objective of testing a client's cost accounting system is to determine that costs have been properly assigned to work in process, finished goods, and cost of goods sold. This involves verifying that the cost accounting system follows generally accepted accounting principles and is functioning as planned. While physical inventories and quantities on hand are important aspects of a cost accounting system, they are not the primary focus of the auditor's testing.

When an Auditor Tests a Client's Cost Accounting System,the Auditor's