INTRODUCTION

TO COST
ACCOUNTING
PATRICK LOUIE E. REYES,
CTT, MICB, RCA, CPA
CPA Licensure Exams
•Only available to graduates of BS ACCOUNTANCY 👨‍🎓👩‍🎓
•Composed of Six Subjects:
• Financial Accounting and Reporting (FAR)
• Advanced Financial Accounting and Reporting (AFAR)
• Management Advisory Services (MAS)
• Auditing (AUD)
• Taxation (TAX)
• Regulatory Framework for Business Transactions (RFBT)
Point?
•Readiness 🙃
•Just because you passed ACCT 101 and 102 😅
•Connection to our lesson
• Out of the subjects mentioned, we focus on two: FAR and MAS
Financial Accounting
•Accounting 101 and 102 (CFAS and FAR)
•Analysis, Summary, and Reporting of Financial
Transactions
•End product: General Purpose Financial Statements
(made available for public use)
Managerial Accounting
•You have yet to learn about this 🤣
•Usage of Accounting Information in pursuit of an
organization’s goals
•Used in decision making, by…decision makers
(management) 🤣
Financial vs. Managerial
FINANCIAL ACCOUNTING
FOR EXTERNAL USE
CPA
LOOKS AT BUSINESS AS A WHOLE
REQUIRED AT THE END OF
ACCOUNTING PERIOD
RELIES ON PRECISE AND
ACCURATE DATA
STANDARDS-BASED
HISTORICAL
MANAGERIAL ACCOUNTING
FOR INTERNAL USE
CPA, CMA
MORE DETAILED VIEW
REQUIRED ON DEMAND
CAN RELY ON ESTIMATES
CAN BE MADE IN ANY WAY A
BUSINESS DESIRES
TIME TRAVEL 😂 (PAST, FUTURE)
 Financial Cost Managerial
Accounting Accounting Accounting
Cost Accounting 💸💰
Based on the Venn Diagram…
•Cost Accounting has attributes of both Financial and
Managerial Accounting
But is part of neither Financial Accounting nor
Management Advisory Services!
It forms part of Advanced Financial Accounting and
Reporting in the CPA Licensure Examinations 😲
Cost Accounting 💸💰
Addresses informational demands of both financial and
managerial accounting by providing product cost
information to:
• EXTERNAL PARTIES (stockholders, creditors, and
various regulatory bodies) for decision-making and for
reporting purposes
• INTERNAL MANAGERS for planning, controlling,
decision-making, and evaluating performance.
Role of Cost Accounting⚙️
Addresses informational demands of both financial and
managerial accounting by providing product cost
information to:
• EXTERNAL PARTIES (stockholders, creditors, and
various regulatory bodies) for decision-making and for
reporting purposes
• INTERNAL MANAGERS for planning, controlling,
decision-making, and evaluating performance.
Scope of Cost Accounting
•Stages of Cost Accounting:
• Cost Accumulation – collection of cost data
• Cost Assignment – tracing and allocation of costs to cost
objects
•Includes application of math and statistics 🧮 to
analyze 🧠 costs and its impact to managers 👨🏻‍💼👩🏻‍💼
•No longer restricted to manufacturing companies; now
used in virtually every organization 🌎🌍🌏
Ethics🍆
•Compliance with Standards of Ethical Conduct for
Practitioners of Management Accounting and
Financial Management (issued by the IMA)
• Maintain highest levels of ethical conduct 😇
• Maintain professional competency 🥇
• Refrain from disclosing confidential information 🤐
• Maintain integrity and objectivity 👍🏻
Ethics🍆
•IMA guidelines suggest that when in doubt 🤔,
answer the following questions:
• Will my actions be fair and just to all parties concerned?
⚖️
• Would I be pleased to have my closest friends and
relatives learn of my actions? 😁