Cost Accounting
COST ACCOUNTING:
A BRANCH OF ACCONTING THE PRINCIPAL PURPOSE OF WHCH IS TO DTERMINE THE COST OF A SINGLE UNIT OR SERVICES (FOR STOCK VALUATION,COST PLANNING AND CONTROL AND PROFIT REPORTING PURPOSE)
.
OR
A BRANCH OF ACCOUNTING THAT DEALS WITH THE ACCUMULATION AND ANALYSIS OF COST INFORMATION FOR INTERNAL USE TO AID MAMNAGEMENT IN PLANNING, CONTROL AND DECISION MAKING
OR
THAT PART OF ACCOUNTING SYSTEM THAT MEASURES THE COST FOR THE PURPOSES OF MANAGEMENT DECISSION MAKING AND FINANCIAL REPORTING.
OR
THE BARANCH OF ACCOUNTIG THAT DEALS WITH
1. STOCK VALUATION (RAW MATERIAL,WORK IN PROCESS, FINISHED GOODS)
2. PROFITS
3. BALANCE SHEET
NOTE: IT IS TO BE NOTED THAT ALL OF THE THREE POINTS DELAS WITH HISTORICAL COST AND OF CHARGING THESE COSTS TO UNITS OF OUTPUT OR TO DEPARTMENTS WHICH WAS ORIGINALLY THE OBJECTIVE OF COST ACCOUNTING.
MODERN VIEW OF COST ACCOUTING
THESE OBJECTIVES NOW HAS BEEN EXTENDE TO PLANNING, CONTROL AND DECISION MAKING i.e NOW COST ACCOUNTANT CAN ANSWER FOLLOWING QUESTIONS
1) WHAT ARE FUTURE COST OF GOODS AND SERVICES LIKELY TO BE
2) HOW DO ACTUAL COST COMPARED WITH PLANNED COST
3) WHAT INFORMATION DOES MANAGEMENT NEED IN ORDER TO MAKE SENSIBLE DECISIONS ABOUT PROFITS AND COSTS
COST ACCOUTING Vs FINANCIAL ACCOUNTING
CONCERN: FINANCIAL ACCOUNTING IS CONCERN WITH FINANCIAL INFORMATION WHEREAS COST ACCOUNTING IS CONCERNED WITH COST INFORMATION
NATURE : FINANCIAL ACCOUNTING FROVIDES INFORMATION IN MONETARY TERMS WHEREAS COST ACCOUNTING PROVIDES INFORMATION IN BOTH MONETARY AND NON MONETARY TERMS LIKE TONNES OF ALUMINIUM PRODUCED, MONTHLY MACHINE HOURS.
REPORTING : FINANCIAL ACCOUNTING CONCERNS PRIMARILY WITH FINACIAL REPORTING FOR EXTERNAL USE, COST ACCOUNTIG PRIMARILY CONCERNS WITH
A BRANCH OF ACCONTING THE PRINCIPAL PURPOSE OF WHCH IS TO DTERMINE THE COST OF A SINGLE UNIT OR SERVICES (FOR STOCK VALUATION,COST PLANNING AND CONTROL AND PROFIT REPORTING PURPOSE)
.
OR
A BRANCH OF ACCOUNTING THAT DEALS WITH THE ACCUMULATION AND ANALYSIS OF COST INFORMATION FOR INTERNAL USE TO AID MAMNAGEMENT IN PLANNING, CONTROL AND DECISION MAKING
OR
THAT PART OF ACCOUNTING SYSTEM THAT MEASURES THE COST FOR THE PURPOSES OF MANAGEMENT DECISSION MAKING AND FINANCIAL REPORTING.
OR
THE BARANCH OF ACCOUNTIG THAT DEALS WITH
1. STOCK VALUATION (RAW MATERIAL,WORK IN PROCESS, FINISHED GOODS)
2. PROFITS
3. BALANCE SHEET
NOTE: IT IS TO BE NOTED THAT ALL OF THE THREE POINTS DELAS WITH HISTORICAL COST AND OF CHARGING THESE COSTS TO UNITS OF OUTPUT OR TO DEPARTMENTS WHICH WAS ORIGINALLY THE OBJECTIVE OF COST ACCOUNTING.
MODERN VIEW OF COST ACCOUTING
THESE OBJECTIVES NOW HAS BEEN EXTENDE TO PLANNING, CONTROL AND DECISION MAKING i.e NOW COST ACCOUNTANT CAN ANSWER FOLLOWING QUESTIONS
1) WHAT ARE FUTURE COST OF GOODS AND SERVICES LIKELY TO BE
2) HOW DO ACTUAL COST COMPARED WITH PLANNED COST
3) WHAT INFORMATION DOES MANAGEMENT NEED IN ORDER TO MAKE SENSIBLE DECISIONS ABOUT PROFITS AND COSTS
COST ACCOUTING Vs FINANCIAL ACCOUNTING
CONCERN: FINANCIAL ACCOUNTING IS CONCERN WITH FINANCIAL INFORMATION WHEREAS COST ACCOUNTING IS CONCERNED WITH COST INFORMATION
NATURE : FINANCIAL ACCOUNTING FROVIDES INFORMATION IN MONETARY TERMS WHEREAS COST ACCOUNTING PROVIDES INFORMATION IN BOTH MONETARY AND NON MONETARY TERMS LIKE TONNES OF ALUMINIUM PRODUCED, MONTHLY MACHINE HOURS.
REPORTING : FINANCIAL ACCOUNTING CONCERNS PRIMARILY WITH FINACIAL REPORTING FOR EXTERNAL USE, COST ACCOUNTIG PRIMARILY CONCERNS WITH