{"id":7926,"date":"2013-01-29T08:46:23","date_gmt":"2013-01-29T08:46:23","guid":{"rendered":"http:\/\/vskills.in\/certification\/tutorial\/?p=7926"},"modified":"2024-04-12T14:13:54","modified_gmt":"2024-04-12T08:43:54","slug":"concept-of-cost-accounting","status":"publish","type":"page","link":"https:\/\/www.vskills.in\/certification\/tutorial\/concept-of-cost-accounting\/","title":{"rendered":"Business Accounting Tutorials | Concept of Cost Accounting"},"content":{"rendered":"
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\"Concept<\/a><\/figure>\n<\/div>\n\n\n

Go back to Tutorial<\/a><\/p>\n\n\n

Cost accounting is an accounting process that primarily aims to capture a company\u2019s costs of production by ascertaining the input costs at each step of production as well as fixed cost such as the depreciation of capital equipment. The result obtained aids the company\u2019s management in decision making and thus measuring financial performance.<\/p>\n

Differentiate between Financial Accounting and Cost Accounting <\/b><\/h3>\n\n\n\n\n\n\n\n\n\n
Basis of Distinction<\/strong><\/td>\nFinancial Accounting<\/strong><\/td>\nCost Accounting<\/strong><\/td>\n<\/tr>\n
Objective <\/b><\/td>\nObjective is to determine the profit of the organization<\/td>\nObjective is to determine the cost of a product\/service<\/td>\n<\/tr>\n
Type of user<\/b><\/td>\nMeant for external users<\/td>\nMeant for internal users<\/td>\n<\/tr>\n
Measure <\/b><\/td>\nUses accounting numbers<\/td>\nAlong with accounting numbers, it uses non-financial measures<\/td>\n<\/tr>\n
Period <\/b><\/td>\nPeriodicity of financial accounting is fixed. i.e half yearly, quarterly<\/td>\nPeriodicity of cost accounting depends on the need of the organization<\/td>\n<\/tr>\n
Usage <\/b><\/td>\nUses only actual costs and revenues<\/td>\nAlong with actual costs and revenue cost accounting uses national cost and revenues<\/td>\n<\/tr>\n
Preparation <\/b><\/td>\nIt is not prepared from cost accounting<\/td>\nIt is prepared from financial accounting<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
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Factor considered before installing a costing system<\/strong><\/h3>\n

An Organization must plan and implement a costing system in accordance with the requirements of the management. Some of the factors that should be considered before installing the cost accounting system are:<\/p>\n