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CMA Final · Cost and Management Audit · Overview of Cost Accounting Standards and GACAP

The Generally Accepted Cost Accounting Principles (GACAP) issued by ICMAI primarily aim to do which of the following?

GACAP offers a framework of accepted principles that guide cost accounting practice, so that costs are measured, assigned and reported consistently and comparably across entities. It is not a statute, a tax measure or a statutory auditing standard.

  1. AReplace the Companies Act cost audit provisions
  2. BProvide a framework of principles for consistent cost accounting practice and cost statement preparationCorrect
  3. CPrescribe income tax rates on cost-based computations
  4. DSet auditing procedures for statutory auditors

Explanation

GACAP provides the conceptual principles underlying cost accounting so that cost determination and presentation are consistent and comparable. It does not replace statutory law, set tax rates or lay down statutory audit procedures.

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