When an auditor tests a client’s cost accounting records, the auditor’s tests are primarily designed to determine that(1) costs have been correctly assigned to finished goods, work-in-process, and costof goods sold.(2) quantities on hand have been computed based on acceptable cost accountingtechniques that reasonably approximate actual quantities on hand.(3) physical inventories are in substantial agreement with book inventories.(4) the internal controls are in accordance with accounting standards and are functioning as planned.
When an auditor tests a client’s cost accounting records, the auditor’s tests are primarily designed to determine that(1) costs have been correctly assigned to finished goods, work-in-process, and costof goods sold.(2) quantities on hand have been computed based on acceptable cost accountingtechniques that reasonably approximate actual quantities on hand.(3) physical inventories are in substantial agreement with book inventories.(4) the internal controls are in accordance with accounting standards and are functioning as planned.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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When an auditor tests a client’s cost accounting records, the auditor’s tests are primarily designed to determine that
(1) costs have been correctly assigned to finished goods, work-in-process, and cost
of goods sold.
(2) quantities on hand have been computed based on acceptable cost accounting
techniques that reasonably approximate actual quantities on hand.
(3) physical inventories are in substantial agreement with book inventories.
(4) the internal controls are in accordance with accounting standards and are functioning as planned.
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