Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Chapter 12, Problem 5RQ
To determine
Explain the purpose of using the cost accounting system in the auditing of the financial statements of a manufacturing company.
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O) In a public accounting firm, for example, costs are assigned to an audit engagement in
much the same way they are assigned to a single batch of tables by a furniture
manufacturer.
Discuss the difficulties associated with manual cost accounting and how the organization may improve its accounting information system to more accurately represent the reporting issues.
When testing a company’s cost accounting system, the auditor uses procedures that are primarily designed to determine thata. 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.
Chapter 12 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 12 - Prob. 1RQCh. 12 - Explain the significance of the purchase order to...Ch. 12 - What segregation of duties would you recommend to...Ch. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 8RQCh. 12 - Prob. 9RQCh. 12 - When perpetual inventory records are maintained,...
Ch. 12 - What is meant by a bill and hold scheme?Ch. 12 - What charges and credits may be disclosed in the...Ch. 12 - Prob. 13RQCh. 12 - Prob. 14RQCh. 12 - A well-prepared balance sheet usually includes a...Ch. 12 - Darnell Equipment Company uses the LIFO method of...Ch. 12 - Prob. 17RQCh. 12 - Prob. 18RQCh. 12 - Prob. 19RQCh. 12 - Prob. 20RQCh. 12 - Prob. 21QRACh. 12 - Prob. 22QRACh. 12 - Prob. 23QRACh. 12 - Prob. 24QRACh. 12 - Prob. 25QRACh. 12 - Prob. 26QRACh. 12 - Prob. 27QRACh. 12 - Grandview Manufacturing Company employs standard...Ch. 12 - Prob. 29AOQCh. 12 - Prob. 29BOQCh. 12 - The document issued by a common carrier...Ch. 12 - Which of the following should be included as a...Ch. 12 - Prob. 29EOQCh. 12 - Prob. 29FOQCh. 12 - Instead of taking a physical inventory count on...Ch. 12 - Prob. 29HOQCh. 12 - Prob. 29IOQCh. 12 - Prob. 29JOQCh. 12 - Prob. 29KOQCh. 12 - Prob. 29LOQCh. 12 - Prob. 30OQCh. 12 - Adapted AICPA Task-Based Simulation For each of...Ch. 12 - Prob. 32OQCh. 12 - Prob. 33OQCh. 12 - Prob. 34AOQCh. 12 - Prob. 34BOQCh. 12 - Prob. 34COQCh. 12 - Prob. 34DOQCh. 12 - Prob. 34EOQCh. 12 - Prob. 35OQCh. 12 - Prob. 36PCh. 12 - Prob. 37PCh. 12 - Prob. 38PCh. 12 - Prob. 39PCh. 12 - Prob. 40PCh. 12 - Prob. 41PCh. 12 - Prob. 42PCh. 12 - Prob. 43ITCCh. 12 - Prob. 44ECCh. 12 - Western Trading Company is a sole proprietorship...
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Similar questions
- Walsh & Coggins, a professional accounting firm, collects cost information about the services they provide to their clients. Describe the types of cost data they would collect and explain the importance of analyzing this cost data.arrow_forwardExplain why the Accounting Department should be responsible for producing quality cost reports.arrow_forwardDescribe the key components of a quality control system within an accounting firm or department.arrow_forward
- 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.arrow_forwardWhich of the following best describes the activities of the production function?a. maintenance, inventory control, and production planningb. production planning, quality control, manufac-turing, and cost accountingc. quality control, production planning, manufac-turing, and payrolld. maintenance, production planning, storage, andquality controle. manufacturing, quality control, and maintenancearrow_forwardWith the aid of visual diagrams, describe in detail the audit trail for the following in a manufacturing business: Shipping an order to a customerarrow_forward
- Comprehend and Apply Fundamental concepts and the elements of costing to the job environment. Evaluate and Integrate the role of quantitative information in making business decisions.arrow_forwardComprehend and Apply the elements of costing to the job environment. Evaluate and Integrate the role of quantitative information in making business decisions.arrow_forwardWhat are the types of work performed, the overall areas of focus, and/or other relevant information that would inform someone about a cost accounting career?arrow_forward
- How does the operations manager use the production report to make business decisions?arrow_forwardWhat are the skills needed for the managerial accountant to develop related to process cost systems?arrow_forwardTRUE OR FALSE Management accounting is a subset of cost accounting. Cost accounting is a subset of both management and financial accounting. A primary purpose of cost accounting is to determine valuations needed for external financial statements Two primary hallmarks of cost and management accounting are standardization of procedures and use of generally accepted accounting principles. The act of converting production inputs into finished products or services necessitates cost accounting.arrow_forward
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