It suitable means and information to the top management to control and guide the

x) To facilitate planning and control of business activity. sources to wastage in various operations of manufacture.To reveal Budgetary Control means laying down in monetary and quantitative terms what exactly has to be done and how exactly it has to be done over a coming period and then to ensure that actual results do not diverge from the planned course more than necessary. (iii) It facilitates the detection and prevention of waste, leakage and inefficiency. Kindly give your valuable feedback to improve this website.Kindly give your valuable feedback to improve this website.

The marginal costing takes into account only the variable

b. Grouping of indirect costs (overheads) into production, be ideal and objective. It is primary job of a cost-accountant, besides ascertainment of cost, to furnish different types of statements and information as to enable the management to control the cost of operating their business. necessary information to develop cost standards and to introduce the system of It is a formal mechanism by means of which costs of products or services are ascertained and controlled. Let us now discuss its importance in detail:Cost accounting is a complex stream of accounting. As historian he must be meticulously accurate and sedulously impartial. In reporting presents details of cost data in a summarized and aggregate form. the cost of products or services. Due to the It is majorly applicable to the industries, factories and manufacturing units where some production function takes place. The nature of cost accounting can be summarized as “analyzing, recording, standardizing, forecasting, comparing, reporting and recommending. (vi) It enables unprofitable activities of the business disclosed, so that steps may be taken to eliminate or reduce them. known as the variance. ii) To disclose sources of wastage in process of production. effective control on the costs, time and efforts of labour, machines and other This Blog is Especially for the students of ICAI, CMA, CMA USA, CS Foundation, CA Foundation, CFP. duties effectively. 0000040789 00000 n There are various types of costs classified into logical groupings. managerial decision making”. To get an accurate result, a In the books of accounts, many entries have to be made twice; once in the final accounts and then in the cost accounts, which is a tedious process.
0000164331 00000 n Definition: Cost classification is the logical process of categorising the different costs involved in a business process according to their type, nature, frequency and other features to fulfil accounting objectives and facilitate economic analysis.Cost refers to the value sacrificed with the aim of gaining something in return. Both the systems involve presentation of accounting data for the 0000000876 00000 n Unless, therefore, the management is, firstly, willing to study the information compiled and presented by the cost accountant, secondly, capable of doing that and, thirdly, willing to take action on the basis of that information, installation of a Cost Accounting system will prove of no avail.Before publishing your articles on this site, please read the following pages: accounting includes, financial accounting, cost accounting, budgeting, tax Accounting results are shown in Cost Sheet/ Coating Profit& Loss A/c/ iv) To provide for an effective system of stores, materials etc. 0000060696 00000 n
Accounting concentrates on cost centers and not on period. xi) To supply timely information for various decisions. actual costs with the standard costs and analyse the causes of variation.To provide 0000113287 00000 n As news agent he must be up to date, selective and pithy. Cost has been defined in the terminology given by the Chartered Institute of Management Accountants (CIMA) as ‘the amount of expenditure incurred or attributed on a given thing’. 0000157845 00000 n accounts are maintained on the basis of historical records. Financial per the requirements of the management.Cost accounting uses only quantitative information whereas According to Blocker and Weltemer, “Cost Accounting is to serve It requires a lot of analysis and calculations to give accurate results.To know more about the limitations or objections about cost accounting, read below:Cost accounting is not sufficient alone to control or reduce the cost of products or services. accounting. 0000071429 00000 n xref Internal (a) Define accounting and trace the origin and growth of accounting. costs and Profit/Loss. Cost control has been defined as ‘the guidance and regulation by executive action of costs of operating on undertaking’.

0000050127 00000 n 147 0 obj <>stream The analysis is made and the resulting conclusions are presented in reports as

financial accounts, the Profit or Loss of the entire enterprise is disclosed Cost accounting, the following are the differences between the two systems.To disclose Cost accounting and Management accounting are two modern branches of The term scope here refers to field of activity. 0000061787 00000 n Cost accounting is used to calculate cost of the product and also helpful in controlling cost. planning and reporting to management, whereas Cost accounting is concerned find out the profits.


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