Cost Account
In the
beginning the scope of accounting was limited to keeping of record of business
transactions and to prepare Profit & Loss Account from the view of
financial result and Balance Sheet from the view of financial position. In this
system profit analysis was the main criterion for measuring the efficiency of
an enterprise. Later on, it was realized
that along with profit analysis the cost analysis is also equally important. In
fact, cost computation, cost control and cost analysis have become very useful
and important aspects in this era of severe business competition and in this
context a new branch of accounting known as “Cost Accounting” has emerged.
In the
beginning the scope of accounting was limited to keeping of record of business
transactions and to prepare Profit & Loss Account from the view of
financial result and Balance Sheet from the view of financial position. In this
system profit analysis was the main criterion for measuring the efficiency of
an enterprise. Later on, it was realized
that along with profit analysis the cost analysis is also equally important. In
fact, cost computation, cost control and cost analysis have become very useful
and important aspects in this era of severe business competition and in this
context a new branch of accounting known as “Cost Accounting” has emerged.
Meaning and Definition of cost accounting
Cost accounting is a specialized branch
of general accounting in which detailed and systematic information related to
cost of good or service are maintained in such a way as to obtain detailed
information about total and per unit cost and guidance for the analysis and
control of cost. Some of the definitions of cost accounting are as follows.
1.”Cost Accounting is the technique and
process of ascertainment of cost.”
-I.C.M.A. London
2. “Cost
Accounting is the provision of such analysis and classification of expenditure
as will enable the total cost of any particular unit of production to be
ascertained with reasonable degree of accuracy and at the same time to disclose
exactly how such cost is constituted. ”
- Walter W.Bigg
- Walter W.Bigg
3. “Cost
Accounting are account supplementary or subsidiary to financial account and are
compiled for the purpose of giving additional information as to the detailed
cost of working of an undertaking or any particular section thereof. ”
-L.B. Dicksee
4. “Costing
is the classifying, recording and appropriate allocation of expenditure for the
determination of the cost of products or services, and for the presentation of
suitably arranged data for the purpose of control and guidance of the
management. It includes the ascertainment of the cost of every order, job,
contract, services or unit as may be appropriated. It deals with the cost of
production, selling and distribution. ”
-Harold J. Wheldon
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