COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the information must be reliable and accurate.
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the information must give more value than the cost of preparing it.
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the information must be complete.
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the information must be understandable by managers.
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Detailed explanation-1: -Accounting costs represent anything your business has paid for. You can calculate accounting cost by subtracting your expenses from your revenue. Economic costs represent any “what-if” scenarios for your business. You can calculate economic cost by subtracting implicit costs from your accounting cost.
Detailed explanation-2: -Cost Accounting refers to the classifying, recording and appropriate allocation of expenditure for the purpose of determining the costs of products or services. It also helps in the presentation of arranged data for the control purposes and guidance to the management.
Detailed explanation-3: -Accounting cost is the recorded cost of an activity. An accounting cost is recorded in the ledgers of a business, so the cost appears in an entity’s financial statements.
Detailed explanation-4: -The main objective of cost accounting are ascertainment of cost, fixation of selling price, proper recording and presentation of cost data to management for measuring efficiency and for cost control and cost reduction, ascertaining the profit of each activity, assisting management in decision making process.