Submitted To:- Submitted By:-

Mr. Vivek Kayat Uma(23)

Assistant Prof. Pooja Gupta(02)
 Cost Accounting
 Related cost concepts
 Difference between
Concepts
Nature of cost
accounting
 scope of cost accounting
Continue:-

 Need Of Cost
Accounting
 Advantages
 Limitation
 What is cost accounting?

Cost accounting is the art and science of

recording, classifying, summarizing and
analysing cost to help management make
prudent business decisions.
 What is “cost”?
Cost is an expense
incurred by a
particular unit. In
another way, the cost
is what the business
sacrifices in order to
produce one unit of
product.
What is “accounting”?

Accounting is the art and

science of recording,
classifying, summarizing, and
analyzing inputs to make a
sense of the information related
to financial, management, cost.
 definition
“Cost Accounting is the
technique and process
of ascertainment of
cost.”
-- I.C.M.A.,London
 “Cost Accounting is the processing and
Evaluation of monetary and non-monetary
data to provide information for external
reporting, internal planning and control of
business operations and special analysis
and decision.”
-Morse
Inter-Related concepts

• Cost
• Cost Accounting
• Cost accountancy
• Costing
 Cost:-
“Cost is a measurement in monetary terms
of the amount of resources used for the
purpose of production of goods or
rendering services.”
-Cost Accounting Standard-1
 Cost accounting

“Cost accounting involves a study of

those concepts, tools, and technique
which help in ascertaining and
analysing costs.”
 Cost accountancy
“Cost accountancy is the application
of costing and cost accounting
principles, methods and technique to
the science, art and practice of cost
control and the ascertainment of
profitability.”
 Difference between costing, cost
accounting and cost accountancy
Basis of Costing Cost Cost
difference Accounting Accountancy
1. Meaning and It is concerned It is concerned It is concerned
relation with with recording with principle,
ascertainment of cost. techniques and
of cost. methods.
2. Scope Very Narrow Narrow Much Wider

3. Point of It begins where It begins where It is the starting

functioning accountancy costing ends. point of costing
ends. system.

4. Persons Related with Related with Cost accountant

involved cost accountant. cost clerks. and
• Branch of knowledge
• As a Science
• As an Art
• As a Profession
 Branch of knowledge

It is an organised body of knowledge

consisting of its own principles,
concepts and conventions.
 As a science

Cost accounting is a science because it

has its own principles and rules, which
are followed on regular basis in a
systematic manner.
 As an art

Cost accounting is an art because its

principles and techniques are used in
solving the business problems through
cost data.
 As an profession
In recent years cost
accounting has
become the
important
professions which
has become more
challenging.
 Scope of cost accounting

• Costing or Cost ascertainment

• Cost Accounting
• Cost Control
• Cost Audit
 Cost ascertainment

i. Collection and Analysis of Expenses

ii. Measurement of Production
iii. Linking up of Production with
Expenses
 Cost accounting

a) Cost classification
b) Cost recording
c) Cost allocation
d) Cost determination
e) Cost reporting
 Cost control

“The guidance and regulation by

executive action of the cost of
operating and undertaking.”
-ICMA
 Cost Audit

“The verification of the cost

correctness of cost accounts and
the adherence to the cost
accounting plan.”
-ICMA
Need for cost accounting

•To Overcome the Limitations of

Financial Accounts
•To Ensure Optimum Utilisation of
Resources
•To Achieve Overall Efficiency of
Business
 Advantages of cost
accounting
1. Measurement and Improvement of
Efficiency
2. Profitable and Unprofitable Activities
3. Fixation of Prices
4. Guide in Reducing Prices
5. Information for Proper planning
6. Control over Materials
 Continue:-
7. Decision Regarding Machine vs.
Labour
8. Expansion in Production
9. Reason for Losses Detected
10.Helps in Taking Decisions
11.Check on Accuracy of Financial
Accounts
 Limitations of cost
accounting
1. Lack of uniformity
2. Conceptual diversity
3. Costly
4. Ignorance of futuristic situation
5. Lack of double entry systems
6. Developing stage
reference

 Dr. S.N. Maheshwari

 Dr. Sakshi vasudeva
 M.L. Aggarwal
 Dr. K.L. Gupta