Cost Accounting

Essential Factors to be Considered for Designing a Cost Accounting System

For ensuring the efficient and successful operation of the cost accounting system, certain factors are to be given due consideration while designing such a system. These factors may be given as follows: (i) Technical Details of the Business: All the technical details of the business concern, its organizational structure, manufacturing procedure and process, selling and …

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Advantages of Cost Accounting

Cost accounting system renders invaluable services to the manufacturers, management, employees, investors, consumers and Government. These services or advantages may be summarized as follows: (A) Advantages to manufacturers and management The main advantages of a sound cost accounting system to the manufacturers and management are: 1. Ascertainment of cost: The principal object of cost accounting …

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Similarities and Differences Between Cost Accounts and Financial Accounts

Similarities Cost accounts and Financial accounts which are kept quite separate in a business concern, are similar in certain respects while in some other respects these differ from each other. The various  similarities between cost accounts and financial accounts may be given as follows: (i) Both cost accounts and financial accounts are maintained on the …

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Comparison between Cost Accounting and Financial Accounting

Cost accounting is very closely related to financial accounting. It is generally said that the cost accounting system is complementary to the financial accounting system. According to L. W. Hawkins—”the ordinary trading account is a locked warehouse of most valuable information, to which the cost system is the key.” The Trading and Profit and Loss …

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Selling and Distribution Overheads

Definition of Selling and Distribution Overheads According to the terminology adopted by the Institute of Cost and Management Accountants, England, the selling overheads constitute “the cost incurred in promoting sales and retaining customers“ and the distribution overheads constitute “the cost of the process which begins with making the packed product available for despatch and ends …

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Administrative Overheads

Introduction It is common practice to classify and separately collect the production, administrative, selling and distribution costs. The administrative overheads are related to office expenses. The selling and distribution expenses are related to marketing. All these expenses combined together give us the total selling cost. While accounting the production overheads and valuing the closing stock, …

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Methods of Time-Keeping

There are two methods of time-keeping: 1. Manual Methods which are divided into dance Register or Muster Roll and (ii) Check, Token or Disc Method. 2. Mechanical Methods which are divided into Time Clock Method : (a) Dial Recorder System and (b) Key Recorder System. 1. Manual Methods of Time-Keeping (a). Attendance Register or Muster …

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Classification and Codification of Materials

Classification of Materials ‘Classification‘ refers to the systematic division, grouping or categorization of materials or store items with reference to some common characteristic. Classification of materials can be made on different bases namely nature, manufacturing process, value, purpose etc. For identification of materials being purchased and stored it is necessary that they should be properly …

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Material Control

Definition of Material Control “Materials control is the systematic control over the materials at all its stages—procurement, storage and usage—so as to help in maintaining regular and uninterrupted flow of the materials in the production pipeline.” No system of costing can be said to be complete without the proper system of material control. Material control …

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Costing

Definition The Institute of Cost and Management Accountants (ICMA) defines costing as “the techniques and process of ascertaining costs“. This simply speaks of technique and process. To elaborate it can be said that costing is a systematic process of determining the unit cost of output produced or service rendered, It analyses the expenditure incurred on …

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Cost Accountancy

Cost Accountancy has been developed to meet the needs of the management of all those organisations which It has now become an essential part of accountancy which only a few decades ago was very much a part of the financial accounting. The Institute of Cost and Management Accountants, London has defined Cost Accountancy as “the …

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Backlog Depreciation

Definition of Backlog Depreciation Whenever an asset is revalued, the profit on revaluation is transferred to Revaluation Reserve Account. But, the revaluation also gives rise to a backlog depreciation. This backlog depreciation should be charged to Revaluation Reserve Account. The concept of backlog depreciation can be followed by the help of the below illustration. Formula …

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Calculation of Depreciation Adjustment under Current Cost Accounting Technique

The Current Cost Accounting method assets are shown in the balance sheet on current replacement costs after allowing for depreciation. This will require an adjustment in depreciation too. Formula Current year’s depreciation under CCA can be calculated with the help of following formula: And, Depreciation Adjustment = Current year’s depreciation on CCA – Depreciation on …

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Process Costing MCQs

Process Costing MCQs quiz is prepared for the students to test their knowledge and clear their concepts. This may also be helpful to prepare objective exam and interviews. Process costing multiple choice question quiz consists of 9 questions with 4 options as the answer. Students need to select the correct option to proceed to the next question. …

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Specific Order Costing MCQs

Take the quick MCQs test to test your knowledge about Specific Order Costing System. This multiple choice questions quiz may helpful for the preparation of objective exams and interviews. Let’s take Specific order costing MCQs quiz below:

Overhead Costing MCQs

MCQs always help students to clear their concepts and test knowledge about a particular subject. Here, We have prepared Overhead Costing MCQs for the students to prepare themselves for objective exams and to appear for an interview. How to take Overhead Costing MCQs quiz? Overhead costing MCQs quiz consists of 12 questions with 4 multiple choice options for …

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Labor Costing MCQs

We have prepared Labor Costing MCQs quiz for the students to get clear their concepts. This quiz may also be helpful for their objective exams and to prepare themselves for job interviews. Labor Costing MCQs quiz consists of 7 questions with 4 options for each question. Students need to choose the correct answer. Below you …

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Material Costing MCQs

Material Costing MCQs test will be helpful for the students to clear their concepts and to prepare themselves for the objective exam. This will also be helpful for individuals who are going to appear in an interview. Material Costing (MCQs) Multiple Choice Questions quiz consists of 14 questions. All questions have 4 multiple choice options from …

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Current Purchasing Power Method (C.P.P.)

Definition Current Purchasing Power Method (C.P.P.) is also known as General Price-Level Accounting. This method is recommended by the Accounting Policy Board and also the Financial Accounting Standards Board (FASB) of USA. This method adjusts historical cost for changes in the general level of prices as measured by the general price-level index. Changes in the general …

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Inflation Accounting

Definition Inflation is that state of affair when money in circulation is more than the production of commodities and services and purchasing power of money comes down and prices of commodities and services increases. Accounting for changing prices (Inflation Accounting) has become synonymous with accounting for inflation due to the unprecedented pressure of inflationary price …

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Human Resource Accounting

Definition The term ‘Human Resource Accounting‘ means accounting for human beings, the most important-organizational resource. The accounting of it deals with the measurement of costs which are associated with recruiting, selecting, hiring, training, placing and developing the employees of an organization. It also involves measuring the present economic value of human resources to an organization. …

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