COST ACCOUNTING:

A BRANCH OF ACCONTING THE PRINCIPAL PURPOSE OF WHCH IS TO DTERMINE

THE COST OF A SINGLE UNIT OR SERVICES (FOR STOCK VALUATION,COST
PLANNING AND CONTROL AND PROFIT REPORTING PURPOSE)
.
OR

A BRANCH OF ACCOUNTING THAT DEALS WITH THE ACCUMULATION AND

ANALYSIS OF COST INFORMATION FOR INTERNAL USE TO AID MAMNAGEMENT
IN PLANNING, CONTROL AND DECISION MAKING

OR
THAT PART OF ACCOUNTING SYSTEM THAT MEASURES THE COST FOR THE
PURPOSES OF MANAGEMENT DECISSION MAKING AND FINANCIAL REPORTING.

OR
THE BARANCH OF ACCOUNTIG THAT DEALS WITH

1. STOCK VALUATION (RAW MATERIAL,WORK IN PROCESS, FINISHED

GOODS)
2. PROFITS
3. BALANCE SHEET

NOTE: IT IS TO BE NOTED THAT ALL OF THE THREE POINTS DELAS WITH

HISTORICAL COST AND OF CHARGING THESE COSTS TO UNITS OF OUTPUT OR
TO DEPARTMENTS WHICH WAS ORIGINALLY THE OBJECTIVE OF COST
ACCOUNTING.

MODERN VIEW OF COST ACCOUTING

THESE OBJECTIVES NOW HAS BEEN EXTENDE TO PLANNING, CONTROL AND

DECISION MAKING i.e NOW COST ACCOUNTANT CAN ANSWER FOLLOWING
QUESTIONS
1) WHAT ARE FUTURE COST OF GOODS AND SERVICES LIKELY TO BE
2) HOW DO ACTUAL COST COMPARED WITH PLANNED COST
3) WHAT INFORMATION DOES MANAGEMENT NEED IN ORDER TO MAKE
SENSIBLE DECISIONS ABOUT PROFITS AND COSTS
COST ACCOUTING Vs FINANCIAL ACCOUNTING
 CONCERN: FINANCIAL ACCOUNTING IS CONCERN WITH FINANCIAL
INFORMATION WHEREAS COST ACCOUNTING IS CONCERNED WITH COST
INFORMATION

 NATURE : FINANCIAL ACCOUNTING FROVIDES INFORMATION IN

MONETARY TERMS WHEREAS COST ACCOUNTING PROVIDES
INFORMATION IN BOTH MONETARY AND NON MONETARY TERMS LIKE
TONNES OF ALUMINIUM PRODUCED, MONTHLY MACHINE HOURS.

 REPORTING : FINANCIAL ACCOUNTING CONCERNS PRIMARILY WITH

FINACIAL REPORTING FOR EXTERNAL USE, COST ACCOUNTIG
PRIMARILY CONCERNS WITH ACCUMULATION AND ANALYSIS OF COST
REPORTS FOR INTERNAL USE

 COST OF PRODUCTION : FINANCIAL HAS NO CONCERNED WITH COST OF

PRODUCTION WHEREAS DETRMINING THE COST OF PRODUCTTION IS ONE
OF THE PRIMARY OBJECTIVE OF COST ACCOUNTING

V
COST ACCOUNTIG s MANAGERIAL ACCOUNTING
THOUGH IT IS VERY DIFFICULT TO DIFFERNTIATE COST ACCOUNTING WITH
MANAGERIAL ACCOUNTING HOWEVER FOLLOWING ARE FEW POINTS IN THIS
REGARD

SCOPE : MANAGEMENT ACCOUNTING IS WIDER IN SCOPE AND USES MORE

ADVANCED TECHNIQUES , WHEREAS EXISTENCE OF GOOD COST ACCOUNTIG
SYSTEM IS A FUNDAMENTAL REQUIREMENT OF MANAGEMENT ACCOUNTING

SOURCE: COST ACCOUNTING SYSTEM PROVIDES BOTH FINANCIAL AND

MANAGERIAL ACCOUNTING INFORMATIONS RELATED TO COST OF ACQUIRING
OR CONSUMING RESOURCES BY AN ORGANISATION IT INCLUDES BOTH
MONETARY AS WELL AS NON MONETARY INFORMATIONS ,ON THE OTHER SIDE
MANAGEMENT ACCOUNITNG DEALS PRICIPALLY WITH GATHERING DATA
FROM BOTH EXTERNAL AND INTERNAL SOURCES AND ANALYSING ,
PROCESSING ,INTERPRETING AND COMMUNICATING THE RESULT
INFORMATION WITHIN THE ORGANISATION TO AID MANAGEMENT PROCESS