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CMA Intermediate · Cost Accounting · Introduction to Cost Accounting

Under the Cost Accounting Standards issued by the ICMAI, which statement best describes the role of the Cost Accounting Standards Board (CASB)?

The Cost Accounting Standards Board formulates cost accounting standards that bring uniformity and consistency to how costs are measured, assigned and presented. It does not conduct cost audits of companies, set product prices or prescribe tax rates, which are functions outside its mandate.

  1. AIt formulates cost accounting standards to bring uniformity and consistency in cost measurement, assignment and presentationCorrect
  2. BIt audits the cost records of every company in India each year
  3. CIt fixes the selling prices of products for all manufacturers
  4. DIt prescribes the rates of income tax payable by cost accountants

Explanation

The CASB of ICMAI frames Cost Accounting Standards so that cost is measured, assigned and presented on uniform, consistent principles across organisations. It does not perform audits, fix prices or prescribe tax rates; the distractors describe functions belonging to other bodies or no body at all.

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