- a-It is used to record costs of selling activities.
- b-It is used with periodic inventory systems.
- c-It generates timely information about inventory.
Correct Answer:
C. It generates timely information about inventory.
Explanation:
A cost accounting system is primarily designed to track, manage, and analyze the costs associated with producing goods or services. It helps businesses understand the costs of production, inventory, and operations. Here’s why the answer is correct:
- Option A – “It is used to record costs of selling activities.”
- This is not the primary function of a cost accounting system. While selling costs can be considered part of overall costs, cost accounting focuses on production or operational costs rather than selling activities.
- Option B – “It is used with periodic inventory systems.”
- Cost accounting can be used with both perpetual and periodic inventory systems. It is not limited to just periodic systems.
- Option C – “It generates timely information about inventory.”
- This is the correct option because a cost accounting system is designed to track and manage inventory levels, allowing for timely reporting of inventory costs. The system helps businesses accurately calculate the costs of goods sold (COGS) and adjust inventory valuations as needed.
