Meaning of Cost A/c

 

Cost :

Institute of Cost and Works Accountants of India, defines cost as “measurement, in monetary terms, of the amount of resources used for the purpose of production of goods or rendering services”.

Thus the term cost means the amount of expenditure, actual or notional incurred or attributable to a given thing. It can be regarded as the price paid for attaining the objective. For e.g. Material cost is the price of materials acquired for manufacturing a product.

 

Costing :

The term costing has been defined as “the techniques and processes of ascertainment of costs. Whelden, has defined costing as, “the classifying recording and appropriate allocation of expenditure for the determination of costs the relation of these costs to sale value and the ascertainment of profitability.” Therefore costing involves the following steps.

1) Ascertaining and Collecting of Costs

2) Analysis or Classification of Costs

3) Allocating total costs to a particular thing

i.e. product, a contract or a process.

Thus costing simply means cost finding by any process or technique.

 

Cost Accounting

Cost Accounting is a formal system of accounting by means of which cost of products or service, are ascertained and controlled.

“Whelden” defines Cost Accounting as “Classifying, recording and appropriate allocation of expenditure for determination of costs of products or services and for the presentation of suitably arranged data for the purpose of control and guidance of management.”

Therefore, Cost Accounting is the application of costing principles, methods and techniques in the ascertainment of costs and analysis of savings or / and excesses as compared with previous experience or with standards.

It provides, detailed cost information to various levels of management for efficient performance of their functions. The information supplied by Cost Accounting as a tool of management for making optimum use of scarce resources and ultimately add to the profitability of business.

Cost Accounting = Costing (+) Application of Cost control methods and ascertainment of profitability (+) Presentation of relevant information for managerial decision making.

 

Cost Accounting is the process of accounting for costs. It shows classification and analysis of cost on the basis of functions process, products etc. It also deals with cost computation, cost saving, cost reduction etc. In cost accounting cost per unit of output produced or services rendered is ascertained. It helps management in the control of cost of output or services rendered.

Cost Accountancy: Cost Accountancy is defined as ‘the application of Costing and Cost Accounting principles, methods and techniques to the science, art and practice of cost control and the ascertainment of profitability’. It includes the presentation of information derived there from for the purposes of managerial decision making. Thus, Cost Accountancy is the science, art and practice of a Cost Accountant.

 

 

 

 

 

 

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