Archive | Cost Accounting

Flexible Budgeting: Meaning and Disadvantages | Accounting

In this article we will discuss about:- 1. Meaning of Flexible Budget 2. Importance of Flexible Budget 3. Steps in Preparation 4. Disadvantages. Meaning of Flexible Budget: Flexible budget is a budget which, by recognizing the difference in behaviour between fixed and variable costs in relation to fluctuations in output, turnover, or other variable factors, […]

4 Main Inventory Systems | Cost Accounting

The following points highlight the four main inventory systems. The systems are: 1. Perpetual Inventory System 2. Continuous Stock Taking System 3. Periodic Stock Taking System 4. Two Bin System. 1. Perpetual Inventory System: CIMA defines perpetual inventory system as “the recording as they occur of receipts, issues and the resulting balances of individual items […]

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 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. […]

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 Accounting and Management Accounting: Difference

The upcoming discussion will update you about the differences between cost accounting and management accounting. Difference # Cost Accounting: 1. Cost accounting is concerned more with the ascertainment, allocation, distribution and accounting aspects of costs. 2. The Cost Accounting data generally serves as a base to which the tools and techniques of Management Accounting can […]

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 Accounting: Meaning and Limitations

In this article we will discuss about:- 1. Meaning and Terminology of Cost Accounting 2. Objectives of Cost Accounting 3. Limitations of Cost Accounting. Meaning and Terminology of Cost Accounting: Cost: ‘Cost’ may be defined as: (i) The amount of expenditure (actual or notional) incurred on or attributable to a given thing; or (ii) To […]

Difference between Fixed Budget and Flexible Budget | Costs

The upcoming discussion will update you about the differences between fixed budget and flexible budget. Difference # 1. Fixed Budget: 1. Costs are not classified according to their variability, i.e., fixed, variable and semi- variable. 2. Fixed budget is inflexible and remains the same irrespective of the volume of business activity. 3. Fixed budget assumes […]

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 […]

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