How Cost Accountant can play effective role to achieve predetermined objectives of company.

Content type

User Generated

Type

Study Guide

Uploaded By

gubeybpxv

Pages

Rating

How Cost Accountant can play effective role to achieve

predetermined objectives of company.

COST ACCOUNTING

Cost accounting is a recent development in the accounting world. Since

beginning of twentieth century and particularly during the and after World War-I

the industrialists become more and more cost conscious. This was partly due to

because of growing competition between manufacturers and partly because of

increasing government control over pricing. During the war most of the

manufacturing was done on cost plus system. During the World War- II many

governments came out with legislations which had the effect of placing almost

blanket control over prices. Thus, it became imperative for manufacturers:-

 Improve quality of the products

 Trace the cost accurately for each product

 Control the costs.

Financial accounting failed to achieve those objectives, and it therefore made

the accountants think and a new technique of accounting known as cost accounting.

Cost accounting has emerged mainly because of limitations of financial accounting.

Cost accounting a specialized branch of accounting, which involves classifications,

accumulation, assignment and control of costs.

Cost accounting has been defined as “the recording, classifying and appropriate

allocation of expenditure for the determination of the cost of product or service, and

for the presentation of suitably arranged data for the purpose of control and

guidance of management”.

The cost accounting relates to the collection, classification, and ascertainment of cost

and its accounting and control relating to the various elements of the cost. It is the

formal mechanism by means of which costs of product or services are ascertained

and controlled.

Costing:

Costing is the technique and process ascertaining costs. Cost accounting is

different from costing in the sense that the former provides only the basis and

information for ascertainment of cost. Once the information is made available, the

costing can be carried out arithmetically by means of memorandum statements or

by method of integral accounting. Weldon has defined it as “the classifying,

recording and appropriate allocation of expenditure for the determination of

product or services; the relation of these costs to sales values and the ascertainment

of profitability.

Management accounting is the internal business building role of accounting and

finance professionals who work inside organizations. These professionals are

involved in designing and evaluating business processes, budgeting and forecasting,

implementing and monitoring internal controls, and analyzing, synthesizing, and

aggregating information—to help drive economic value.

The role of management accounting differs from that of public accounting, since

management accountants work at the “beginning” of the value chain, supporting

decision making, planning and control, while audit and tax functions involve

checking the work after the fact. Management accountants are valued business

partners, directly supporting an organization's strategic goals. With a renewed

emphasis on good internal controls and sound financial reporting, the role of the

management accountant is more important than ever.

It obviously takes more people to “do” the work than it does to “check” the

work. In fact, of the five million finance function professionals in the U.S., more

than 90% work inside organizations as management accountants and finance

professionals. Some common job titles for management accountants in organizations

of all sizes and structure include:

 Staff Accountant

 Cost Accountant

 Senior Accountant

 Corporate or Division Planner

 Financial Analyst

 Budget Analyst

 Internal Auditor

 Finance Manager

 Controller

 Vice President, Finance

 Treasurer

 Chief Financial Officer (CFO)

 Chief Executive Officer (CEO)

Cost Accountant

Practitioners of accountancy related to cost are known as cost accountants.

What are the predetermined objectives of company?

First of all it is mandatory for us that we understand the predetermined

objectives, what its implications are, how they are set and how a cost accountant can

play its vital role in achieving those earlier set objectives.

If we analyze from a sole trader to large firms, organizations and companies before

they start their business they need some resources to start their business and as soon

as they acquire those resources they set certain goals objectives which are called the

predetermined objectives of that business.

Predetermined objectives can be:

1. What would be the projected sales?

2. What would be the anticipated expenses?

End of Preview - Want to read all 6 pages?

Access Now

Unformatted Attachment Preview

How Cost Accountant can play effective role to achieve predetermined objectives of company. COST ACCOUNTING Cost accounting is a recent development in the accounting world. Since beginning of twentieth century and particularly during the and after World War-I the industrialists become more and more cost conscious. This was partly due to because of growing competition between manufacturers and partly because of increasing government control over pricing. During the war most of the manufacturing was done on cost plus system. During the World War- II many governments came out with legislations which had the effect of placing almost blanket control over prices. Thus, it became imperative for manufacturers:- Improve quality of the products Trace the cost accurately for each product Control the costs. Financial accounting failed to achieve those objectives, and it therefore made the accountants think and a new technique of accounting known as cost accounting. Cost accounting has emerged mainly because of limitations of financial accounting. Cost accounting a specialized branch of accounting, which involves classifications, accumulation, assignment and control of costs. Cost accounting has been defined as "the recording, classifying and appropriate allocation of expenditure for the determination of the cost of product or service, and for the presentation of suitably arranged data for the purpose of control and guidance of management". The cost accounting relates to the ...
Purchase document to see full attachment