Limitations of financial accounting have made the management to realize the importance of cost accounting
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The following are the important limitations of financial ACCOUNTANT
No detailed cost information: Financial accounting does not provide detailed information for each product, process, job or operation.It only provides information regarding income and expenditure, assets an liability of the organization on a particular date.
No classification of cost: Financial accounting does not classify cost into direct and indirect, fixed & variable, controllable, uncontrollable, normal and abnormal cost etc. It only divides expenditure in to two categories as Capital and Revenue.
No helpful in price fixation: Financial accounting does not provide adequate information for fixation of selling prices of the product produced or services rendered by the business. It is not also able to prepare tender or quotations.
No control on cost: Financial accounting does not provide proper system of controlling to various elements of cost, that is material labor and expenses. Cost control procedure can be adopted by setting standards, but it lacks in financial accounting.
@MINNIONLOVER
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HERE IS YOUR ANSWER
HOPE THIS WILL HELP YOU
IF U LIKE THIS QUESTION MARK IT AS BRAINLIEST
The following are the important limitations of financial ACCOUNTANT
No detailed cost information: Financial accounting does not provide detailed information for each product, process, job or operation.It only provides information regarding income and expenditure, assets an liability of the organization on a particular date.
No classification of cost: Financial accounting does not classify cost into direct and indirect, fixed & variable, controllable, uncontrollable, normal and abnormal cost etc. It only divides expenditure in to two categories as Capital and Revenue.
No helpful in price fixation: Financial accounting does not provide adequate information for fixation of selling prices of the product produced or services rendered by the business. It is not also able to prepare tender or quotations.
No control on cost: Financial accounting does not provide proper system of controlling to various elements of cost, that is material labor and expenses. Cost control procedure can be adopted by setting standards, but it lacks in financial accounting.
@MINNIONLOVER
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Answer:
Financial accounting and cost accounting are different each other , they have some limitations and advantages
Explanation:
- No provisions for material cost - Financial accounting does not contains a detay information about the material consumed in manufacturing concerns
- Non availability of detailed particular about labour cost - Financial account contains record of total wages of workers but they do not indicates the number of workers employed, rate of wages, number of workers on leave and so on
- Classification of accounts in General manner - Financial accounting has classified as personal, real and nominal which doesn't help to determine the cost of production in product wise, job wise , department wise , so on
- Ascertainment of true cost of production not possible - Financial accounts keeps records of all the expenses of the business irrespective of whether they are relevant to the cost of production
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