INTRODUCTION OF COST AND MANAGERIAL

ACCOUNTING 18/03/2013

Cost accounting ?

Cost accounting is a formal system of accounting for costs in the book of account by means of which costs of product and services are ascertained and controlled.There is a difference between costing and cost accounting.Costing means finding out cost of product or service by any technique or method, cost accounting means costing using double entry system.

Objectives and functions of cost accounting

i. Ascertainment of costii. Control of costiii. Guide to business policyiv. Determination of selling pricev. Measuring and improving

performance

Difference between financial and cost accounting

Purpose

Statutory requirement

Analysis of cost and profit

Perodicity of reporting

Control aspect

Historical and predetermined costs

Format of presenting information

Types of transaction recorded

Types of statements prepared

Costing system and its installation

Steps in installation:

1. Preliminary investigation

2. Organization structure

3. Modification of methods

4. Examined methods

5. Record designed

6. Size studied

7. Effectiveness

8. Avoid unnecessary details

9. Operation of system

10. Introduction

Management accounting & its relation to cost & financial

accounting Management accounting means any form of accounting

which enables a business to be conducted more efficiently.

It is an integral part of the mangement which is concerned with identifying, presenting and interpreting information used for: formulating strategy planning and controlling activites decision making optimising the use of resources disclosure to shareholder safeguarding assets

Preparing profit &loss account &

balance sheet

Analysing cost for

control & maximizing efficiency

Assisting managementfor planning,

decision making and

control

Financial accounting

Cost accounting

Management accounting

Scope of Management Accounting

1. Financial accounting

2. Cost accounting

3. Budegting and forecasting

4. Tax planning

5. Reporting to management

6. Cost control procedures

7. Statistical tools

8. Internal control and internal audit

9. Financial analysis and interpretation

10. Office services

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