Cost Accounting - Acquiring Financial Information and Economic Decision

Cost accounting frequently termed as managerial or management accounting, is the branch of accounting which provides financial information and economic decision to an organization. The idea of acquiring information for use in the company (to support management to plan, direct and control operations) differentiate Cost Accounting from other sectors of the accountancy profession. This public information is planned and introduced based on few rules accepted accounting principles, the wide rules which guarantee the user of the basic framework supporting the information.

 

Alternatively, cost accounting is restricted mainly to make utilize of within the company to aid management in the procedure of producing options which will gain the stockholders by maximizing company gains which translate into maximizing stockholder wealth. Since the information is utilized internally, the information might be introduced on any logical basis on situation that will aid the manager to reach a suitable decision.
 

Small ideas in cost accounting, however, form the bridge connecting financial accounting and managerial accounting topics. Such idea is of product costing for an industrialized company. Not only is this information utilized within decision making (e.g., does a company generate or buy a part?), product costing is too employed to decide the historical basis of account for the cost of manufactured goods sold in the coursework of a time and the cost of the unsold stock which remains as an asset on the statement of financial position at the end of the phase.
 

Most of the cost accounting ideas are advantageous for management in decision-making, both for developed and service corporations. While abundance of the ideas is suitable to both types of companies. Therefore, some ideas to be discussed has understanding the distinction among manufacturing and non-manufacturing costs (and how such are revealed in the financial statements), evaluating the cost of manufacturing a product (or offering a service), recognizing cost behavior and hence to utilize cost-volume-profit relationships, setting prices, budgeting,   and budgetary controls, and capital budgeting.
 

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