Definition of Cost accounting:
The recording of all the costs incurred in a business in a way that can be used to improve its management.
A method of accounting in which all costs incurred in carrying out an activity or accomplishing a purpose are collected, classified, and recorded. This data is then summarized and analyzed to arrive at a selling price, or to determine where savings are possible.
In contrast to financial accounting (which considers money as the measure of economic performance) cost accounting considers money as the economic factor of production.
Cost accounting is used by a company's internal management team to identify all variable and fixed costs associated with the production process. It will first measure and record these costs individually, then compare input costs to output results to aid in measuring financial performance and making future business decisions. There are many types of costs involved in cost accounting, which are defined below.
Cost accounting is a form of managerial accounting that aims to capture a company's total cost of production by assessing the variable costs of each step of production as well as fixed costs, such as a lease expense.
How to use Cost accounting in a sentence?
- Depending on the type of business you run it may be easier to keep a cost accounting form of records instead of the traditional form.
- It may be easier to use a cost accounting strategy for certain projects to figure out what your bottom line really is.
- The cost accounting skills of the certified public accountant were demonstrated when he analyzed our inventory despite our lack of records.
- Types of cost accounting include standard costing, activity-based costing, lean accounting, and marginal costing.
- Unlike financial accounting, which provides information to external financial statement users, cost accounting is not required to adhere to set standards and can be flexible to meet the needs of management.
- Cost accounting is used internally by management in order to make fully informed business decisions.
- In the wake of a spate of bankruptcies during 1997-98, the corporate sector is also emphasizing better cost accounting and more transparent balance sheet management.
- Cost accounting considers all input costs associated with production, including both variable and fixed costs.
Meaning of Cost accounting & Cost accounting Definition