Cost, Costing, Costing Accounting,

Cost Accountancy

• Cost – Actual expenditure incurred on a given thing;

– “Cost is the value of economic resources used as a result of
producing or doing the thing costed”
Costing – as the ascertainment of costs
- It refers to the techniques and processes of ascertaining costs
and studies the principles and rules concerning the determination
of cost of products and services
Cost Accounting – It is the method of accounting for cost. The
process of recording and accounting for all the elements of cost
is called ‘cost accounting’.
Cost Accountancy – It is an aid to management for decision
making.
 Need for cost accounting
• Fixation of sellling prices
• Control of cost and
• Decision making from alternative choices
Scope of Cost Accounting:
• It is concerned with ascertainment and control of costs.
• The information provided to the management is helpful for cost control
and cost reduction through functions of planning, decision making and
control.
• The main objective of finding the product cost.
• With the development of business activity and introduction of large scale
production, the scope of cost accounting was broadened and providing
information for cost control and cost reduction has assumed equal
significance along with finding out cost of production.
 Objectives of Cost Accounting
• Cost finding or cost ascertainment
• Control of cost
• Reduction of cost
• Fixation of selling price
• Providing information for framing business
policy.
 Difference between Financial Accounting and Cost Accounting
Financial Accounting Cost Accounting
Objective To report to owners and outsiders Provide cost information to
management for decision making
Legal Prepared as per the requirement of To fulfill the internal requirements of
requirement companies Act and Income tax Act the management
Classification of Classifies records and analyses Cost accounting records and analyses
transactions transactions in a subjective manager expenditure in an objective manner
Stock Valuation Stock are values at cost or realisable Stocks are valued at cost
value, w.e.l
Analysis of Profit and loss of the entire enterprises Reveal profit or loss of different
Profit and cost is disclosed products, departments separately.
Accounting Financial reports are prepared Cost reports are prepared as per the
period annually requirements. Viz., daily, weekly,
monthly, quarterly or annually.

Emphasis Recording of transactions and control On ascertainment of cost and cost

control.
Nature Maintained on the basis of historical Both historical and predetermined
records costs.