Archive | Cost Accounting

Ratio Analysis: Steps and Nature | Accounting

In this article we will discuss about:- 1. Introduction to Ratio Analysis 2. Steps in Ratio Analysis 3. Nature. Introduction to Ratio Analysis: The company’s financial information is contained in Balance Sheet and Profit and Loss Account. The figures contained in these statements are absolute and sometimes unconnected with one another. An absolute figure does […]

Users of Ratio Analysis | Accounting

In this article we will discuss about the users of ratio analysis in accounting. Ratio analysis of a firm’s financial statements is of interest to a number of parties, mainly, share-holders, creditors, debtors, firm’s own management etc. People in various walks of life are at present interested in ratio analysis though in different ways and […]

Coefficient of Correlation (With Diagram)

In this article we will discuss about the coefficient of correlation. A cost line, and thus cost behaviour pattern can be established using the various methods above from any set of data. Whether the values obtained for unit variable cost and total fixed cost are of practical use depends upon whether there is a clear […]

Top 2 Methods of Costing | Accounting

The following points highlight the top two methods of costing. The methods are: 1. Specific Order Costing 2. Continuous Operation Costing. Method # 1. Specific Order Costing: CIMA defines specific order costing us “the basic costing method applicable where the work consists of separate contracts, jobs or batches, each of which is authorized by a […]

Cost Accounting System: Necessity and Essentials

In this article we will discuss about:- 1. Introduction to Cost Accounting System 2. Necessity for Cost Accounting System 3. Reports Provided by Cost Accounting Department 4. Essentials of Good Cost Accounting System 5. Essential Factors for Good Cost Accounting System 6. Practical Difficulties in Installation of Cost Accounting System 7. Suggestions to Overcome Practical […]

Cost Centre: Meaning and Types | Cost Accounting

In this article we will discuss about the meaning and types of cost centres. Meaning of Cost Centre: Cost Centre: CIMA defines Cost Centre as “a production or service, function, activity or item of equipment whose costs may be attributed to cost units. A cost centre is the smallest organizational sub-unit for which separate cost […]

Cost Codification: Objectives and Methods | Cost Accounting

In this article we will discuss about:- 1. Objectives of Cost Codification 2. Requirements of Efficient Coding System 3. Methods. CIMA defines a coding “a system of symbols designed to be applied to a classified set of items, to give a brief accurate reference facilitating entry, collation and analysis”. Codification of costs is a system […]

Need for Cost Management | Accounting

In this article we will discuss about the need for cost management. The business environment has changed dramatically after 1980s. Improved communication and transportation systems brought about a much more competitive environment. Spending on marketing and distribution has increased. The modern organizations started exercising strict control over manufacturing costs. Information technology changed the way organizations […]

Classification of Costs: 5 Types | Accounting

The following points highlight the five main types of classification of costs. The types are: 1. Cost Classification by Nature 2. Cost Classification in Relation to Cost Centre 3. Cost Classification by Time 4. Cost Classification for Decision Making 5. Cost Classification by Nature of Production Process. Type # 1. Cost Classification by Nature: The […]

Cost Accounting and Financial Accounting | Accounting

0The upcoming discussion will update you about the differences between cost accounting and financial accounting. Difference # Cost Accounting: 1. Cost accounting is an internal reporting system for an organization’s own management for decision making etc. 2. Cost accounting is more concerned with short-term planning and its reporting period is much lesser than Financial Accounting. […]

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