Which of the Following Statements Is Correct Regarding the Audit

question 19

Multiple Choice

Which of the following statements is correct regarding the audit of inventory cost accounting?

• A) Cost accounting systems and controls are the same for all manufacturing companies.
• B) All companies that have work-in-process must use a perpetual inventory system.
• C) Auditors test perpetual inventory master files by examining documentation that supports additions and reductions of inventory amounts in the master files.
• D) Manufacturing companies keep their cost accounting records separate from the production and other accounting records.

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Definitions:

Interest Rate

The percentage at which interest is paid by a borrower for the use of money, or the rate earned on an investment.

Annual Benefits

Benefits or returns that are received on a yearly basis from investments, insurance policies, or employee benefit programs.

Compounded Monthly

Refers to the process of applying interest to an initial amount and any accumulated interest on a monthly basis.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.