Question

Define cost costing and cost accounting explain briefly the nature and objective of cost accounting

Answer 1

Answer:

Cost Accounting

Definition :- According to R.N. Carter , " The system of accounting for the material and labour used in the production of a commodity or its allied activities is called cost accounting. "

Nature Of Cost Accounting

Nature of Cost Accounting are :-

• Double entry system - Cost Accounting System is a part of general accounting system. In cost accounts, also the theories of double entry system is followed as in financial accounting.

• Scientific way of classification and analysis - In this system, the work of accounting is done in such a scientific manner that information as regards the entire expenditures can be got through their classification and analysis.

• Finds Total Cost And Unit Cost - Under this system, the total cost and the unit cost of producing a commodity or service can be find out.

• Finds Production Cost - In this system, cost of producing a commodity or service can be find out after the completion of work and also when the work is in progress.

• Ensures Proper Performance - In this system of accounting, the accounting work is done in such a manner that it enables the evaluation of production work of every person associated with production so that cost control methods can be applied accordingly and also ensures proper performance.

Objectives Of Cost Accounting

Objectives of Cost Accounting are :-

• Analyzation And Classification Of Cost - To study analyse and classify the cost of goods and services produced.

• Finding Out Total Cost And Unit Cost - To find out the total cost and the unit cost of goods and services.

• Finding Out Cost Price And Determining Selling Price - To find out the cost price on the basis of which selling price can be determined or to ascertain costs so that selling prices can be rightly fixed for purposes of quotations are tenders.

• Evaluation of Efficiency and Inefficiency - To evaluate the efficiency of a department and persons involved in production and to check inefficiency and control unproductive activities.

• Cost Control - To Control the costs incurred on materials, labour and other production activities and to check wastage.

• Determining standard, processing & comparison - To determine the standard of every work and process and compare it with the actual results or conclusion.

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