Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Textbook Question
Chapter 24, Problem 2RQ
Explain why an auditor is interested in a client’s future commitments to purchase raw materials at a fixed price.
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Explain why an auditor is interested in a client’s future commitments to purchase raw materials at a fixed price.
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.
You mention changes and revisions to the standard cost systems. If you were the Operations manager of a manufacturing firm, what control would you have in place to assure those changes were proper and accurate? What assertions would apply here?
Chapter 24 Solutions
Auditing And Assurance Services
Ch. 24 - Prob. 1RQCh. 24 - Explain why an auditor is interested in a clients...Ch. 24 - Prob. 3RQCh. 24 - Prob. 4RQCh. 24 - Prob. 5RQCh. 24 - Prob. 6RQCh. 24 - Prob. 7RQCh. 24 - Prob. 8RQCh. 24 - What major considerations should the auditor take...Ch. 24 - Identify five audit procedures normally done as a...
Ch. 24 - Prob. 11RQCh. 24 - Prob. 12RQCh. 24 - Prob. 13RQCh. 24 - Prob. 14RQCh. 24 - Prob. 15RQCh. 24 - Prob. 16RQCh. 24 - Prob. 17RQCh. 24 - Prob. 18RQCh. 24 - Prob. 19RQCh. 24 - Prob. 20.1MCQCh. 24 - Prob. 20.2MCQCh. 24 - Prob. 20.3MCQCh. 24 - Prob. 21.1MCQCh. 24 - Prob. 21.2MCQCh. 24 - Prob. 21.3MCQCh. 24 - Prob. 22.1MCQCh. 24 - Prob. 22.2MCQCh. 24 - Prob. 22.3MCQCh. 24 - Prob. 23.1MCQCh. 24 - Prob. 23.2MCQCh. 24 - Prob. 23.3MCQCh. 24 - Prob. 24DQPCh. 24 - Prob. 25DQPCh. 24 - Prob. 26DQPCh. 24 - Prob. 28DQPCh. 24 - Prob. 29DQPCh. 24 - Prob. 32DQPCh. 24 - Prob. 33DQP
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- In measuring the cost of quality, which one of the following is considered an appraisal cost? a. Rework cost b. Product testing cost c. Warranty claims cost d. Equipment maintenance costarrow_forwardWhich of the following is a prevention cost? a. Inspection of materials. b. Continuing supplier verification. c. Prototype inspection. d. Recalls.arrow_forwardWhy would management be concerned about the accuracy of product costs?arrow_forward
- Identify the compliance and/or regulatory issues influencing the the cost of the products made. For example, strict regulations on product pricing, tariffs imposed on raw materialsarrow_forwardWhy is it important to consider the relationships amongcost, quality, and selling prices when establishing standardsfor direct materials?arrow_forwardWhat features of the cost accounting system would be expected to prevent the omission ofrecording materials used in production?arrow_forward
- Why is it important to consider the relationship among cost, quality, and selling prices when establishing standards for direct materials?arrow_forwardWhy would management take extra effort to ensure approximate budgets for direct labor, direct materials, and manufacturing overhead? Please provide relevant information and terminology to support your response?arrow_forwardConsider which of the above costs is relevant to the decision situation? a. The cost of existing inventory, in a keep vs. disposal decision. b. The cost of special electrical wiring, in an equipment acquisition decision. c. The salary of a supervisor who will be transferred elsewhere in the organization, d. in a department-closure decision.arrow_forward
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