When an Auditor Tests an Entity's Cost Accounting System, the Auditor's

question 50

Multiple Choice

When an auditor tests an entity'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.

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Definitions:

Independently Verified

Describes information, data, or claims that have been confirmed for accuracy or validity by a third-party source without conflicts of interest.

Fact Checking

The process of verifying the accuracy and truthfulness of information, statements, or claims.

Credible

Being believable or trustworthy, often used to describe reliable sources or information.

Secondary Research

The analysis, synthesis, and interpretation of existing research or data, as opposed to original or primary research.