In simple words we can say cost accounting is the classifying, recording and appropriate allocation of expenditure for the determination of the costs of products or services and the presentation of arranged data for the purpose of control and guidance of management. The limitations of financial accounting have made the management to realise the importance of cost accounting. The Chartered Institute of Management Accountants, London, defines cost accountancy as “the application of costing and cost accounting principles, methods and techniques to the science, art and practice of cost control. Comparability – The cost records should be maintained in such a way to facilitate comparison between present and past figures. 6. (ii) No fixation of selling price – Financial Accounting does not fix the selling price. Practice includes the continuous efforts of a cost accountant in the field of cost accountancy. It includes methods for recognizing, classifying, allocating, aggregating and reporting such costs and comparing them with standard costs." 2. Nature: Cost accounting is a branch of accounting. 9. To compute product-wise profit, and advise the management for the enhancement of profit. Its benefits should exceed its cost. Here, science includes the body of systematic knowledge a cost accountant should possess for proper discharge of his responsibilities. The method of remunerating the labour should also be checked and introduce attractive incentive plans if necessary. Cost Accounting: The purpose of cost accounting is to analyze the expenditure so as to ascertain the cost of various products manufactured by the firm and fix the prices. Helps in inventory control – Costing furnishes control which management requires in respect of stock of materials, work-in-progress and finished goods. Course. Therefore in order to meet the specific requirements of a business relating to the cost, a business unit with the help of the cost accountants have to device a proper system. It is these published financial statements which are generally the basis for investment decisions by the shareholders, lending decisions by banks and financial institutions and credit decisions by vendors. Cost accounting is a system for recording data and producing information about costs for the products produced by an organisation and/or the services it … To help the government, Wage Boards and Trade Unions in wage fixation and price fixation. However, for all this, it is necessary for the management to be capable of using in a proper way the information provided by the cost accounts. University. “Cost Concept Terminology” interpretation during decision making according to the conve­nience of cost accountants acts as a hurdle for standards. To advise the management for the formulation of future expansion policies and proposed capital outlays. Management has to avoid the possibility of waste at each stage. 3. Prohibited Content 3. Profitable and unprofitable activities are disclosed. Some expenses are variable, some are semi-variable, and some of fixed nature. 3. Cost Accounting Books. To provide actual figures of cost for comparison with ‘estimates, standards or budgets and to serve as a guide for future estimates. Need 8. Everything you need to know about cost accounting. Cost accounting is an art in the sense it requires the ability and skill on the part of cost accountant in applying the principles methods and techniques of cost accountancy to various management problems. x. In periods of depression, cost accounting guides in deciding the extent to which the selling prices may be reduced to meet the special situation. In case of impersonal call center, the activities are done with the help of plant and machinery. 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