Relation between cost accounting and financial accounting
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This document discusses the relationship between financial accounting and cost accounting. While they are similar in some ways, such as using double-entry bookkeeping and analyzing business results, they differ in their purpose and approach. Financial accounting focuses on external reporting, uses a subjective approach, and records historical costs annually. Cost accounting focuses on internal reporting to management, uses an objective approach to classify costs, and provides frequent cost data to evaluate efficiency and inform pricing and inventory valuation.
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* Beginning raw materials inventory: $32,000
* Raw materials purchased: $276,000
* Ending raw materials inventory: $28,000
* Raw materials available for use: $32,000 + $276,000 = $308,000
* Raw materials used: Raw materials available - Ending inventory = $308,000 - $28,000 = $280,000
The cost of direct material used is $280,000.
The answer is C.
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direct material used?
A. $276,000
B. $272,000
C. $280,000
D. $ 2
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-Meaning of Cost Accounting
-Scope of Cost Accounting
-Nature of Cost Accounting
-Relationship b/w Financial Accounting & Cost Accounting
-Cost Accounting v/s Management Accounting
-Objectives of cost accounting
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-Advantages of cost accounting
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This document provides an introduction to cost accounting. It defines cost accounting as the recording and presentation of business transactions related to production for measurement and control purposes. Cost accounting differs from financial accounting in that it focuses on internal transactions and provides information to management for decision making. The objectives of cost accounting include controlling and reducing costs, determining selling prices, assisting management with decisions, and ensuring profit from each business activity.
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Join us on Facebook: http://www.facebook.com/welearnindia
Follow us on Twitter: https://twitter.com/WeLearnIndia
Read our latest blog at: http://welearnindia.wordpress.com
Subscribe to our Slideshare Channel: http://www.slideshare.net/welingkarDLPBatch costing
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* Beginning raw materials inventory: $32,000
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The answer is C.
material was still present. What is the cost of
direct material used?
A. $276,000
B. $272,000
C. $280,000
D. $ 2
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-Advantages of cost accounting
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-Role of cost in cost accounting
-Cost Unit & Cost Centre
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-Components of total cost
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Cost accounting involves determining the cost of products or services by classifying, recording, and allocating expenditures. It provides essential cost data to management for planning, operation, and decision making. The objectives of cost accounting are to analyze costs, determine unit costs, identify inefficiencies, provide profit/loss data, and guide pricing. While financial accounting focuses on measuring overall profitability, cost accounting aims to ascertain costs to help eliminate unprofitable products/services and maximize profits. Cost accounting is important for periods of competition, aiding price fixation, making estimates, improving production, eliminating waste, enabling comparisons, and providing data for profit/loss statements.
Unit 1.pptx
Management accounting provides accounting information to assist management in planning, controlling, and decision-making. It focuses on the future and internal reporting needs of management rather than the past and external reporting emphasized in financial accounting. Management accounting uses both financial and non-financial quantitative and qualitative data accumulated from financial and cost accounting systems. It involves tasks like financial statement analysis, cash flow analysis, budgeting, variance analysis, and generating customized reports to meet the specific information needs of management for decision-making.
Eco 10 ,bcom, ignou-elements of costing
Eco 10 ,B COM, IGNOU-Elements of costing
ALL SO USEFUL FOR CA CMA, CS ,B COM, BBA. MBA
IGNOU BCOM ECO-10 (Elements of Costing) Study Material –Dear Learners, The full downloadable free study materials of ECO-10 (Elements of Costing) are listed below to facilitate your studies for securing good marks in upcoming term end examinations. Though, your performance in examination will mostly depend on your efforts only. Even though, I can assure you that the following study materials will proof to be cabalistic in your efforts.
Block- 1 Basic Concepts
Unit-1 Nature and Scope
Unit-2 Concept of Cost and Its Ascertainment
Block- 2 Materials and Labour
Unit-3 Procurement, Storage and Issue
Unit-4 Inventory Control
Unit-5 Pricing the Issue of Materials
Unit-6 Labour
Block- 3 Overheads
Unit-7 Classification and Distribution of Overheads
Unit-8 Absorption of Factory Overheads
Unit-9 Treatment of Other Overheads
Block-4 Methods of Costing
Unit-10 Unit Costing
Unit-11 Reconciliation of Cost Financial Accounts
Unit-12 Job and Contract Costing
Unit-13 Process Costing
1. Cost Accountancy
2. Cost Accounting
2.1 Definition of Cost Accounting 2.2 Objectives of Cost Accounting 2.3 Importance of Cost Accounting 2.4 Advantages of Cost Accounting 2.5 Limitations of Cost Accounting 2.6 Reports Generated by Cost Accounting Department
3. Installation of Cost Accounting System
3.1 Basic Considerations 3.2 Steps in Introduction 3.3 Essentials of a Good Cost Accounting System 3.4 Difficulties in Introduction
Similar to Relation between cost accounting and financial accounting (20)
Introduction to management accounting, cost concepts and classification
Introduction to management accounting, cost concepts and classification
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Relation between cost accounting and financial accounting
- 1. Cost Accounting Prof.U.K.Teke Relationship between financial accounting and cost accounting
- 2. Cost accounting is very closely-related to financial accounting. Some authorities on the subject consider cost accounting to be the branch of financial accounting. But it may be said that cost accounts is complementary to financial accounts, i.e. a subject which is necessary to make financial accounts whole or complete. Financial accounts and cost accounts are both similar in certain respects. But in some other respects they differ from one another. Introduction
- 3. Points of Similarities (a) The fundamental principles of double entry is applicable in both the systems of accounts. (b) The invoices and vouchers constitute the common basis for recording transactions under both the systems of accounts. (c) The results of business are revealed by both the systems of accounts. (d) The causes for losses and wastages of a business are provided by both these systems of accounts. (e) The determination of future business policy is guided by both these systems of accounts. (f) A basis for comparison of expenses is being provided by both the accounting systems. (g) Accuracy of accounts is maintained under both the systems by means of exercising check over errors and commissions which might creep in either of accounts.
- 4. Points of Dissimilarities (Difference) Points of differences Financial Accounts Cost Accounts Purpose The purpose of financial accounts is external reporting mainly to owners, creditors, tax authorities, government, and prospective investors. The purpose of cost accounting is internal reporting, i.e., to the management of every business. Obligation to maintain accounts This is to be maintained compulsorily by higher forms of business organisations. The preparation of accounts accordance with the statutory provisions. Cost accounts are maintained voluntarily. In some cases government has directed some companies to maintain cost accounts to improve efficiency. Recording (a) Financial accounts records transactions in a subjective manner, i.e., according to the nature of expenditure. (b) In financial accounts expenses are recorded in totals. (c) Financial accounts records all transactions which takes place in the business. (d) Financial accounts records only historical costs. (a) Cost accounts records transactions in an objective manner, i.e., according to purpose for which costs are incurred. (b) In cost accounts costs are expressed by proper analysis and classification in order to find out cost per unit. (c) Cost accounts records only those costs which affect production and sales. (d) Cost accounts records both historical and estimated costs.
- 5. Points of Dissimilarities (Difference) Analysis of profit Financial accounts disclose profit for the entire business as a whole Cost accounts show the profitability or otherwise of each product, process or operation so as to reveal the areas of profitability. Control a) It does not make use of any control techniques. b) It does not control materials by using any technique. c) Control over labour is not exercised a) It makes use of some important control techniques such a Marginal Costing, Budgetary Control, Standard Costing, etc. in order to control cost. b) It exercises control over materials using some techniques such as ABC analysis, level setting, economic order quantity, etc. c) Control over labour is exercised and efforts are taken to minimise idle time, over time etc.
- 6. Points of Dissimilarities (Difference) Duration of reporting Generally, financial accounts provide financial information once a year. Cost accounting furnishes cost data at frequent intervals. Some reports are daily. Some are weekly and some monthly. Evaluation of efficiency The information provided by financial accounts is not sufficient to evaluate the efficiency of the business. The cost data helps in evaluating the efficiency of the businesses. Pricing It fails to guide the formulation of pricing policy. It provides adequate data for formulating pricing policy. Valuation of stock Stock is valued at cost or market price whichever is less. Stock is always valued of cost price.