INTRODUCTION TO COST ACCOUNTING – STUDY NOTES,
MAY 2021
Introduction to cots accounting
Intuitively cost accounting will be viewed from the following terms:
Cost - Resources incurred and foregone in cost objects (products, serves, cost centres). Elements
of cost are those three considerations regarding costs of prices, expenses and opportunity cost. A
fourth item is notional costs
The following meaning is acceptable for elements of costs including:
Prices: Considerations in exchange of value or ownership.
Expenses: Items that reduce owner’s equity.
Opportunity cost: Benefits foregone in the next best alternative course of action.
Notional cost: A relevantly absurd reference to cost because indeed no cost is incurred (think of
a surveyor who use his living room as an office and consider rent as an expense)
Resources are items that help to meet objectives.
Accounting has been considered in our Fundamentals of accounting.
Accounting is concerned with collecting analysing and communicating financial information.
This information is useful for those who make decision s and plans about business including
those who need to control the.
Terminology
Accounting is discipline that deal with the process of measuring and valuing economic
commodities mainly in terms of money. It deals with the identification and, measurement,
valuation, processing and reporting of costs and benefits for economic and commercial decision-
making.
Accounting is conceived as the intellectual and technical activity of measuring the financial
impact of consummated transactions on the financial position of an enterprise
, Process
Accounting is the process of gathering, accumulation, recording and analyzing data that is
summarized s information in financial statements so that whosever desires may use them for
purposes of their own. (please recall this definition) Accounting convincingly has definite
elaborate steps identified as accounting activities.
Cost accounting:
Accounting is the process of gathering, accumulation cost transactions that is recorded and
analyzed and is summarized into information in financial statements so that management may
use them for cost control, cost management as well as for other decisions purposes (such as,
investment, distribution and output)
Cost accounting systems:
Cost accounting is one of the seven accounting systems:
a) Tax accounting
b) Managerial accounting
c) Fund’s accounting
d) Forensic accounting
e) Auditing
f) Financial accounting
g) Cost accounting
Cost accounting is found with managerial accounting realm
ADVANTAGES OF COST ACCOUNTING:
It reveals profitable and unprofitable activities.
It helps in controlling costs with special techniques like standard costing and budgetary
control
MAY 2021
Introduction to cots accounting
Intuitively cost accounting will be viewed from the following terms:
Cost - Resources incurred and foregone in cost objects (products, serves, cost centres). Elements
of cost are those three considerations regarding costs of prices, expenses and opportunity cost. A
fourth item is notional costs
The following meaning is acceptable for elements of costs including:
Prices: Considerations in exchange of value or ownership.
Expenses: Items that reduce owner’s equity.
Opportunity cost: Benefits foregone in the next best alternative course of action.
Notional cost: A relevantly absurd reference to cost because indeed no cost is incurred (think of
a surveyor who use his living room as an office and consider rent as an expense)
Resources are items that help to meet objectives.
Accounting has been considered in our Fundamentals of accounting.
Accounting is concerned with collecting analysing and communicating financial information.
This information is useful for those who make decision s and plans about business including
those who need to control the.
Terminology
Accounting is discipline that deal with the process of measuring and valuing economic
commodities mainly in terms of money. It deals with the identification and, measurement,
valuation, processing and reporting of costs and benefits for economic and commercial decision-
making.
Accounting is conceived as the intellectual and technical activity of measuring the financial
impact of consummated transactions on the financial position of an enterprise
, Process
Accounting is the process of gathering, accumulation, recording and analyzing data that is
summarized s information in financial statements so that whosever desires may use them for
purposes of their own. (please recall this definition) Accounting convincingly has definite
elaborate steps identified as accounting activities.
Cost accounting:
Accounting is the process of gathering, accumulation cost transactions that is recorded and
analyzed and is summarized into information in financial statements so that management may
use them for cost control, cost management as well as for other decisions purposes (such as,
investment, distribution and output)
Cost accounting systems:
Cost accounting is one of the seven accounting systems:
a) Tax accounting
b) Managerial accounting
c) Fund’s accounting
d) Forensic accounting
e) Auditing
f) Financial accounting
g) Cost accounting
Cost accounting is found with managerial accounting realm
ADVANTAGES OF COST ACCOUNTING:
It reveals profitable and unprofitable activities.
It helps in controlling costs with special techniques like standard costing and budgetary
control
