Cost Accounting

1. What do you mean by Cost Accounting?

Answer. The Classifying, Recording and Appropriate allocation of expenditure for the
determinauon
of the costs of products or service; the relation of these costs of sales values; and the
ascertainment of
Profitability.
Cost Accounting may be described as that part of the accounting system of an organization
which
is devoted to ascertaining in as precise manner as possible the costs of a particulars process.
batch, job, services or unit of industrial activity not as end in itself but as a means of controU mg
all the factors which influence cost — "The Institute of Chartered Accounts of England and
1. What is the objective of Cost Accounting?
Answer. The objectives of Cost Accounting are given below:
I. Cost Determination
I I . Cost Control Cost for Pricing
IV. Profit determination
V. Budgeting and Planning Operation
VI. Cost for Management Decision
2. What Is you mean by Financial Accounting and Cost Accoun

2. What fi you mean by Financial Accounting and Cost Accounting?

Answer.
Financial Accounting: Financial Accounting and cost accounting may be distinguishing with
reference to their Primary objectives.
The main purposes of Financial Accounting are,
I. Recording of transactions concerning the Business;
I I . Preparation of necessary accounts &balance sheet as required by statues particularly in
case
of companies;
Apprising the owners of the "Status" of business as on a particular date and the
results of
operations over a period through reports; &
IV. Analysis and interpretation of financial statements which financial accounting is
mainly
intended to serve external purpose.
Cost Accounting: Cost accounting data are required for internal use. It is mainly concerned with
detailed analysis of costs to provide facts required by operating executives.
These facts are needed for every phases of business activity in relation to:
I. Cost determination with a view to fixing prices or submitting tenders or quotations;
IL Providing Control information;
III. Assisting in policy determination; and
IV. P r ep a r in g s h or t - t er m an d l o n g - t er m p l a n s.