Cost Accountancy

Question

aashishnsk
1st April 2007 From India , Pune

Cost accounting is the process of tracking, recording and analyzing costs associated with the products or activities of an organization. Whereas Generally Accepted Accounting Principles (GAAP) are used to govern Financial Statements required by authorities such as governments , auditors and shareholders, cost accounting is governed exclusively by logic. GAAP reporting records historical events and assigns a monetary value to each event that has taken place. Costs are measured in units of currency by convention. Cost accounting could also be defined as a kind of management accounting that translates the Supply Chain (the series of events in the production process that, in concert, result in a product) into financial values. Managers use cost accounting to support decision making to reduce a company's costs and improve its profitability. In order to support decision-making by management it is fundamentally critical that cost accounting is built on systems that will yield relevant, useful data for decision-making (as opposed to GAAP which uses concepts such as historical costs which have no value for decision-making).

There are at least four approaches:

Standard Cost Accounting

Activity-based Costing

Throughput Accounting

Marginal Costing

Cost Accountancy

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