This document provides an overview of cost and management accounting. It defines cost accounting as classifying, accumulating, assigning, and controlling costs. The objectives of cost accounting are to analyze expenditures, develop cost standards, indicate inefficiencies, provide data for financial reports, reveal sources of economies, provide actual cost figures, and more. Cost accounting aids management, creditors, employees, and the national economy. Its scope includes cost ascertainment, cost control, proper cost-revenue matching, and aiding management decisions. Cost accounting differs from financial accounting and management accounting in its objectives, nature, flexibility, precision, and other factors. The document also outlines advantages like assisting management and reducing costs, and disadvantages like only recording past performance and requiring expertise
2. Cost Accounting
Cost accounting may be regarded as
``a specialised branch of accounting which involves classification,
accumulation, assignment and control of costs.
The Costing terminology of C.I.M.A. London defines cost
accounting as
``The establishment of budgets, standard costs and actual costs of
operations, processes, activities or products, and the analysis of
variances, profitability or the social use of funds”.
3. OBJECTIVES OF COST
ACCOUNTING
(1) To analyse and classify all expenditures
(2) To develop cost standard.
(3) To indicate any inefficiencies.
(4) To provide data for periodical profit and loss accounts and balance sheets.
(5) To reveal sources of economies.
(6) To provide actual figures of cost
(7) To show, where standard costs are prepared, what the cost of production ought
to be.
(8) To present comparative cost data.
(9) To provide a perpetual inventory of stores and other materials.
(10) To provide information to enable management to make short-term.
4. IMPORTANCE OF COST
ACCOUNTING
(a)Costing as an Aid to Management
(b)Costing as an Aid to Creditors
(c)Costing as an Aid to Employees
(d)Costing as an Aid to National Economy
5. SCOPE OF COST
ACCOUNTING
(a)Cost Ascertainment
(b)Control of Costs
(c)Proper matching of cost with revenue
(d)Aids to Management Decision-making
8. Advantages of Cost Accounting
•Assistance to the management
•Helps in reducing costs
•Helps in forecasting
•Helps in preparation of financial account
•Fraud can be reduced
•Helps the government
•Helps in determining loss or profit
9. Disadvantages of Cost Accounting
•Only past performance can be recorded
•Costs keep on changing every year
•Proper maintenance is required
•Expertise is required to record
•Complex system
•Costly to maintain
