COST ACCOUNTING
COST MANAGEMENT SYSTEMS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When using ledgers that have unique accounting requirements
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When using account combination rules
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When account combination rules use constants
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Every accounting method should have a COA.
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When using segment rules
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Detailed explanation-1: -Consistency concept states that accounting procedures and practices should remain same from year to year. Consistency requires that a company’s financial statements follow the same accounting principles, methods, practices and procedures from one accounting period to the next.
Detailed explanation-2: -It is used to organize finances and give interested parties, such as investors and shareholders, a clearer insight into a company’s financial health. To make it easier for readers to locate specific accounts, each chart of accounts typically contains a name, brief description, and an identification code.
Detailed explanation-3: -Two segment labels are required: primary balancing segment and natural account segment.
Detailed explanation-4: -To make a chart of accounts, you’ll need to first create account categories relevant to your business, and then assign a four-digit numbering system to the accounts you create. While making a chart of accounts can be time-consuming, it’s an important tool for understanding the financial health of your business.