You are on page 1of 6

COST ACCOUNTING

Cost --- refers to the price of a product. In management cost refers to expenditure. Costing --- the technique and process of ascertaining cost Cost Accounting --- the process of classifying, recording, allocating and reporting the various costs incurred in the operation of an enterprise.

Objectives of cost accounting
 

To find out the total cost and cost per unit of various products manufactured To disclose the proportion of different elements (such as material, labor and overheads) in the total cost To provide necessary data for fixing the selling price To ascertain the profitability of each product and advise the management as to how these profit can be maximized To identify the sources of wastages and losses in the business To formulate incentive bonus plans and

Difference between cost and financial accounting

Financial accounting reveals the net profit or loss of a business as a whole It records external transactions (transactions with outsiders) It is compulsory It reports operating results usually at the end of the year Stocks are valued at cost or market price

Cost accounting reveals the cost, profit or loss of each product, job or process It is concerned with internal transactions It is compulsory only for certain industries. In other cases, it is optional Information is reported to the management as and when required Stocks are valued at cost

 

Difference between management and cost accounting

The primary objective of management accounting is to provide the management with accounting information necessary for decision making,planning,con trol.

The primary objective of cost accounting is to ascertain the cost of products and services

Continue……..

Scope of management accounting is wider than that of cost accounting. It covers cost data and information provided by cost accounting. It includes financial accounting information, interpretation of financial data.

Scope of cost accounting is comparatively limited. Cost accounting deals with cost data only

Continue………

Information furnished by management accounting is used by the management for internal purposes

Information furnished by cost accounting is used for both internal and external purposes