...- 6B Elementary Cost Accounting Notes 95 Cost Accounting : An Introduction ACCOUNTANCY After passing your senior secondary examination, if you set up a small manufacturing unit, say manufacturing of packing boxes, a problem will arise what price of each box you should quote to the buyer. Many factors are considered while fixing the price of a product/item such as competitors’ price etc. One of the basic factors is the cost of its production. Cost is essential not only to fix price but also to ascertain the margin of profit. Knowledge of the cost determination is also necessary to keep a check on the cost of product/control on wastages, etc. The accounting used to study the various aspects of cost is known as cost accounting. In this lesson, you will learn about meaning, importance, limitations etc. of cost accounting. OBJECTIVES After studying this lesson, you will be able to: state the meaning and scope of cost accounting; explain the objectives of cost accounting; differentiate between cost accounting and financial accounting; state importance of cost accounting; explain limitations of cost accounting. 27.1 MEANING AND SCOPE OF COST ACCOUNTING Cost accounting is the process of determining and accumulating the cost of product or activity. It is a process of accounting for the incurrence and the control of cost. It also covers classification, analysis, and interpretation of cost. In other words, it is a system of accounting, which provides the ...
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...Cost Accounting : An Introduction MODULE - 6B Elementary Cost Accounting 27 COST ACCOUNTING : AN INTRODUCTION After passing your senior secondary examination, if you set up a small manufacturing unit, say manufacturing of packing boxes, a problem will arise what price of each box you should quote to the buyer. Many factors are considered while fixing the price of a product/item such as competitors’ price etc. One of the basic factors is the cost of its production. Cost is essential not only to fix price but also to ascertain the margin of profit. Knowledge of the cost determination is also necessary to keep a check on the cost of product/control on wastages, etc. The accounting used to study the various aspects of cost is known as cost accounting. In this lesson, you will learn about meaning, importance, limitations etc. of cost accounting. Notes OBJECTIVES After studying this lesson, you will be able to: state the meaning and scope of cost accounting; explain the objectives of cost accounting; differentiate between cost accounting and financial accounting; state importance of cost accounting; explain limitations of cost accounting. 27.1 MEANING AND SCOPE OF COST ACCOUNTING Cost accounting is the process of determining and accumulating the cost of product or activity. It is a process of accounting for the incurrence and the control of cost. It also covers classification, analysis, and interpretation of cost. In other words, it is a system of accounting, which provides...
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...Factors Affecting Students’ Choice of Bachelor of Science in Accountancy as Major Charlotte Jhiza A. Beleno Adamson University Abstract The need for accounting graduates continually grows in this decade. The US Bureau of Statistics projected that there will be a 15.7% increase in the number of accounting jobs between 2010 and 2020. This increase in demand gives the importance to study and understand the factors that motivate and encourage students to take up Bachelor of Science in Accountancy as their college course, so that quality graduates will meet the demand in the field of accounting profession. This paper also helps high school teachers, parents and guidance counselors on how they can influence students to take up BS Accountancy in their tertiary level. On the other hand, it also informs the students on the advantages of being accountancy major and an accountant in the future. Factors Affecting Students’ Choice of Bachelor of Science in Accountancy as Major A Review of Related Literature and Studies Accounting as defined by Webster is the system of recording and summarizing business and financial transactions and analyzing, verifying and reporting the results. On the other hand, Accountancy is the profession or practice of accounting. Bachelor of Science in Accountancy prepares students for careers in accounting firms, financial institutions, public sectors, and financial departments of companies. It is an in demand course since there is an upward trend and opportunities...
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...GULU UNIVERSITY FACULTY OF BUSINESS AND DEVELOPMENT STUDIES DEPARTMENT OF FINANCE AND ACCOUNTING BACHELOR OF BUSINESS ADMINISTRATION (BBA) COST AND MANAGEMENT ACCOUNTING (BBA 314) COURSE WORK SEMESTER ONE: 2012/2013 Henry Egyeyu 07/U/456/BAK/PS Tel: +256774366667/+256714366667 Question: Accounting theory and practices have identified financial management, financial accounting and management accounting as distinct entities and granted them independent status. Unfortunately, cost accounting which also appears to many users of accounting data and information as fit to be an independent stream of knowledge, has been denied this opportunity. In many circles, this is considered a very unfair treatment and must be corrected if the accounting discipline has to meaningfully grow. As an upcoming professional in the field, develop a logical position on the cost accounting issue relating it to a practical scenario (case study) in Uganda. Your argument should be presented inform of a report addressed to: Director, cost concern international (Uganda chapter) P.o. Box 17 Kampala Important Response Information: i. The report must be 6-7 (six to seven) pages, well-edited. ii. Strictly use Times New Roman fontage, Font size 12, and 1.5 spacing iii. You must sign the report and provide your phone contact. iv. The report must be submitted within exactly 30 (thirty) days from the date of receipt. Henry & Egyeyu Consultancy P.o box 26031, Gulu 1st October, 2012 ...
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...The Importance of Accounting in Today’s World In the business world, accounting is one discipline of study that all people, regardless of job position, should have some knowledge of. Its concepts can be applied to all job specialties, its importance has been promoted in recent years, and it is useful in people’s everyday lives. First, an accounting education is important because it can be applied in all job specialties. Secretaries must use accounting skills to manage the company check book and orders, auditors have to study financial statements to evaluate the accuracy and integrity of the business, and executives need to judge the success of their business using accounting statements from the past and present. These are just a few of the many possible positions where an understanding of accounting is necessary. Another reason all business students should have some background in accounting is because in recent years, people in the business world have been held more accountable for their financial practices. Since the Enron and WorldCom crisis when independent auditor Arthur Anderson failed to report illegal accounting practices, the SEC has been monitoring public corporations more closely. Thus, companies require some basic knowledge of accounting to avoid any future misstatements unintentionally occurring. Additionally, it is vital that everyone, not just business students, acquire an understanding of accounting for personal benefit. People use accounting...
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...Accounting Proposal Introduction The field of accounting affects every active individual within a society to some extent. Taxpayers, families who budget for the future and businesses evaluating potential products use some form of accounting principles to accomplish the tasks required of them. A functional accounting system is critical to the success and health of any given economy. The purpose of this text is to suggest a solution to the lack of a medium through which accounting knowledge is disseminated. Knowledge of accounting is important in the innovation and improvement of accounting principles. These improvements are important in strengthening the economy of a country to compete in the emerging global market. In general, people would see benefit in their daily lives by understanding how and when to utilize various accounting principles. There are many instances in which these benefits can be seen. Individuals use accounting knowledge to more efficiently manage their financial resources. Also tied to this is the ability to keep accurate financial records in order for individuals to make more informed decisions regarding their money. These decisions include budgeting, fund allocation as well as general money management. These benefits stretch beyond the actual user of accounting principles. If people are better managing their money, they are less likely to fall into debt. If businesses do the same, they will be more averse to failure and bankruptcy. The use of accounting...
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...Human resource accounting Human Resource Accounting is a method to measure the effectiveness of personnel management activities and the use of people in an organization. Historical cost approach This approach is developed by Brummet, Flamholtz and Pyle but the first attempt towards employee valuation made by R. G. Barry Corporation of Columbus, Ohio in the year 1967. This method measures the organization’s investment in employees using the five parameters: recruiting, acquisition; formal training and, familiarization; informal training, Informal familiarization; experience; and development. The costs were amortized over the expected working lives of individuals and unamortized costs (for example, when an individual left the firm) were written off. Limitations * The valuation method is based on false assumption that the dollar is stable. * Since the assets cannot be sold there is no independent check of valuation. * This method measures only the costs to the organization but ignores completely any measure of the value of the employee to the organization (Cascio 3). Replacement Cost approach This approach measures the cost of replacing an employee. According to Likert (1985) replacement cost include recruitment, selection, compensation, and training cost (including the income foregone during the training period). The data derived from this method could be useful in deciding whether to dismiss or replace the staff. Limitations * Substitution of replacement...
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...Introduction and background Cost accounting is the process of accumulating, measuring, analyzing, interpreting and reporting of the information related to the cost. This type of process is useful and relevant for all internal and external stakeholders of the business entity. In the management accounting, the term cost accounting includes the works of establishing budget and actual cost of operations, processes, departments, analysis of the variances and profitability or social use of the funds. In the external stakeholders we include all those who have invested money in the company, such as banks, financial houses, investors and others. Internal stakeholders are those people who work within the premise of the company, such as business or company directors, division heads and managers. Cost accounting has long been used to help managers understand the costs of running a business. Modern cost accounting originated during the industrial revolution, when the complexities of running a large scale business led to the development of systems for recording and tracking costs to help business owners and managers make decisions. In the early industrial age, most of the costs incurred by a business were what modern accountants call "variable costs" because they varied directly with the amount of production. Money was spent on labor, raw materials, power to run a factory, etc. in direct proportion to production. Managers could simply total the variable costs for a product and use this...
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...Definition of 'Accounting Information System - AIS'The collection, storage and processing of financial and accounting data that is used by decision makers. An accounting information system is generally a computer-based method for tracking accounting activity in conjunction with information technology resources. The resulting statistical reports can be used internally by management or externally by other interested parties including investors, creditors and tax authorities. | Answer:There are various importance of accounting information to a business entity. Getting to know what an accounting information is and the importance (need) of it is a great step to improving one's capital base, both from the finance aspect to the resources (raw materials) an organisation uses in carrying out its objectives. An accounting information is simply the data which an organisation/business entity is able to make known to its users. It should be taken note that these users of accounting are of various sections - to which a business entity is one of. A business entity will require an accounting information so as to enable it manage and control its finances and resources. It also needs it for it to be able to improve on its level of profit earning, should it realises it is declining in its profitability level. It also needs to for it know the differences between its marginal liability and its marginal assets. There are so many importance of a business information to a business enterprise, but the...
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...Shannon Carl ACC 310 Cost Accounting 1 Analysis of Cost Accounting Jess Stern 5/28/2012 “Cost accounting is a type of accounting process that aims to capture a company’s costs of production by assessing the input costs of each step of production as well as fixed costs such as depreciation of capital equipment.”( Cost Accounting, 2012). By analyzing the importance of cost accounting to the success of a firm, we will get a better understanding as to why companies use this type of accounting process. Becoming knowledgeable about the various methods of cost accounting and how they are used will enable the company to operate the process appropriately. Understanding how an operating budget works to discipline a firm’s management is also useful information when running a company. To do so, one needs to know the actual elements of the budget and how they are constructed. Lastly, one more beneficial piece of information to comprehend would be what a variance analysis is and how it is used. In the midst of discussing the previous items, there will be various elements that relate to the above topics in which there will be further detail provided. First, why is cost accounting so important to the success of the firm? “Managers rely on cost accounting to provide an idea of the actual cost of processes, departments, operations or product which is the foundation of their budget, allowing them to analyze fluctuation and the way funds are used socially for profit” (Llango, 2009)...
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...Designs From: Sk Date: 10/09/13 Subject: The Purpose Of Accounting I have been appointed to help you in running your shop ‘Capello’s Designs’. The reason for this task, of helping you run your shop, is to assist you in accounting. Failures in keeping track of your accounting in the past has been a drawback to you and in general, failure to accurately account has been tragic for big name organisations too such as Woolworths, Comet. I will be educating you about the importance of accounting with the following report I have written for the business. I will be talking about accounting and the importance and purposes of it. The importance of accounting in any business is second to none. The reason behind this varies from forgetting to pay the bills to getting in trouble with HMRC (HM Revenue and Customs). But before this, the purpose of accounting is to keep up to date with the business’ expenses and profits. One must be accurate in order to keep their business running neat and smooth. Business owner or someone put in charge by the business owner i.e. bookkeeper must record every penny coming into the business and all money going out. If a business fails to do so, they will pay the consequences from running after payments to getting in trouble with hierarchy such as HMRC. If one cannot keep track of it accurately one will ultimately end up paying invalid taxes i.e. paying less or more than needed. Good management in the accounting sector in your business will enable it to grow and...
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...Investopedia defines managerial accounting as the process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals. The information that a managerial account has is primarily targeted to assist managers inside the organization to make better decisions for the company ("Financial accounting," ). On the other hand the financial accounting is greatly different in that it is a method of recording, summarizing and reporting the numerous amounts of dealings from an industry; as a result it makes available a precise representation of the business fiscal situation and performance. The most important objective of financial accounting is the planning of financial statements - including the balance sheet, income statement and cash flow statement that condenses the firm's functioning presentation over a specific period, and financial position at a precise point in time. These statements - which are normally prepared quarterly and annually, and in accordance with Generally Accepted Accounting Principles (GAAP) - are aimed at external parties including investors, creditors, regulators and tax authorities ("Financial accounting," ). The key difference between financial and managerial accounting is that financial accounting is aimed at providing information to parties outside the organization, whereas managerial accounting information is aimed at helping managers within the organization make decisions. The job description of a Managerial...
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...CSLO One: Apply the concepts, analytical techniques, and conventions of basic accounting in both the academic and practice environments. 1a. Describe THOUGHTFULLY why it is important to understand the application of concepts, analytical techniques, and conventions of basic accounting in both the academic and practice environments. (At least one paragraph.) Analytical techniques, and conventions of basic accounting In the accountants, no matter whether in public places exercise or perhaps business, expend time and effort and effort performing analysis with regards to clients. They must come to a decision tips on how to implement completely new information technology or perhaps auditing criteria, tips on how to provide abnormal monetary deals in the economic claims, and exactly how completely new levy legal guidelines influence their clients or perhaps companies. exactly how nicely recent auditing strategies perform and tips on how to improve these individuals; exactly how levy legal guidelines affect companies’ planning and information technology display; exactly how managerial information technology methods guide firms improve their by using the accessible information; exactly how information technology information impacts campaign and career within firms. therefore with the help of essential information technology knowledge there are the publicity to your school and also we could additionally find sensible understanding of exactly how financial is performed and also...
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...written statement of a specific job, based on the findings of a job analysis. It generally includes duties, purpose, responsibilities, scope, and working conditions of a job along with the job's title, and the name or designation of the person to whom the employee reports. Job description usually forms the basis of job specification. For example the bookkeeper position creates financial transactions and creates financial reports from that information. The creation of financial transactions includes posting information to accounting journals or accounting software from such source documents as invoices to customers, cash receipts, and supplier invoices. The bookkeeper also reconciles accounts to ensure their accuracy. A job specification is a detailed description of the role, including all responsibilities, objectives, and requirements. A person specification is a profile of your ideal new employee, including skills, experience, and personality type. For example the bookkeeping specifications are: • Balancing accounts • Processing sales invoices, receipts and payments • Completing VAT returns • Preparing invoices for the Inland Revenue • Checking company bank statements • Repairing cash flow statements • Dealing with financial paperwork and filing The job or employment application is the official form that employers ask all applicants for a position to fill out. The job application is filled out offline in a pen / paper format or, increasingly, online. The job application provides...
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...Accounting Education In the business world, accounting education is one discipline of study that all people, regardless of job position, should have some knowledge of. Its concepts can be applied to all job specialties, its importance has been promoted in recent years, and it is useful in people's everyday lives Barber, (2000). First, accounting education is important because it can be applied in all job specialties. Secretaries must use accounting skills to manage the company cheque book and orders, auditors have to study financial statements to evaluate the accuracy and integrity of the business, and executives need to judge the success of their business using accounting statements from the past and present. These are just a few of the many possible positions where an understanding of accounting is necessary Boreham, (2001). Another reason all business students should have some background in accounting is because in recent years, people in the business world have been held more accountable for their financial practices. Since the Enron and WorldCom crisis, when independent auditor Arthur Anderson failed to report illegal accounting practices, the SEC has been monitoring public corporations more closely. Thus, companies require some basic knowledge of accounting to avoid any future misstatements unintentionally occurring Bourdieu, & Passeron, (1990). Additionally, it is vital that everyone, not just business students, acquire an understanding of accounting for personal...
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