Accounting for Business: Meaning And Scope Of Cost Accountancy
ACCOUNTING FOR BUSINESS II
CHAPTER 1
COST SHEET
Meaning And Scope of Cost Accountancy
The term cost accountancy is wider than the term cost accounting. According to the Terminology of Management and Financial Accountancy Published by the Chartered Institute of Management Accountants, London, cost accountancy means, “the application of costing and cost accounting principles, methods and techniques to the science, art and practice of cost control. It includes the presentation of information derived there from for the purpose of managerial decision making.
Cost Accounting
Cost accounting is the process of accounting for costs. It embraces the accounting procedures relating to recording of all income and expenditure and the preparation of periodical statements and reports with the object of ascertaining and controlling costs. It is thus the formal mechanism by means of which costs of products or services are ascertained and controlled.
Costing
Costing is “the technique and process of ascertaining costs.” Cost accounting is different from costing in the sense that the former provides only the basis and information for ascertainment of cost. Once the information is made available the costing can be carried out arithmetically by means of memorandum statements or by method of integral accounting.
However, the two terms costing and cost accounting are often used interchangeably. No such distinction has also been observed for the purpose of this book. Wheldon has given an exhaustive definition of costing after expanding the ideas contained in the definitions of the terms ‘costing and cost accounting’. According to him costing is, “the classifying recording and appropriate allocation of expenditure for the determination of the costs of products or services; the relation of these costs to sales values; and the ascertainment of profitability”.
Cost Control
According to the Institute of Cost and Works Accountants of India, cost control means “The act of
CHAPTER 1
COST SHEET
Meaning And Scope of Cost Accountancy
The term cost accountancy is wider than the term cost accounting. According to the Terminology of Management and Financial Accountancy Published by the Chartered Institute of Management Accountants, London, cost accountancy means, “the application of costing and cost accounting principles, methods and techniques to the science, art and practice of cost control. It includes the presentation of information derived there from for the purpose of managerial decision making.
Cost Accounting
Cost accounting is the process of accounting for costs. It embraces the accounting procedures relating to recording of all income and expenditure and the preparation of periodical statements and reports with the object of ascertaining and controlling costs. It is thus the formal mechanism by means of which costs of products or services are ascertained and controlled.
Costing
Costing is “the technique and process of ascertaining costs.” Cost accounting is different from costing in the sense that the former provides only the basis and information for ascertainment of cost. Once the information is made available the costing can be carried out arithmetically by means of memorandum statements or by method of integral accounting.
However, the two terms costing and cost accounting are often used interchangeably. No such distinction has also been observed for the purpose of this book. Wheldon has given an exhaustive definition of costing after expanding the ideas contained in the definitions of the terms ‘costing and cost accounting’. According to him costing is, “the classifying recording and appropriate allocation of expenditure for the determination of the costs of products or services; the relation of these costs to sales values; and the ascertainment of profitability”.
Cost Control
According to the Institute of Cost and Works Accountants of India, cost control means “The act of