{"id":2733,"date":"2019-11-22T10:50:03","date_gmt":"2019-11-22T10:50:03","guid":{"rendered":"https:\/\/commerceiets.com\/?p=2733"},"modified":"2019-11-22T10:50:03","modified_gmt":"2019-11-22T10:50:03","slug":"nature-of-cost-accounting","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/nature-of-cost-accounting\/","title":{"rendered":"NATURE OF COST ACCOUNTING"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/nature-of-cost-accounting\/#NATURE_OF_COST_ACCOUNTING\" title=\"NATURE OF COST ACCOUNTING\">NATURE OF COST ACCOUNTING<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/nature-of-cost-accounting\/#The_following_points_are_the_nature_of_cost_accounting\" title=\"The following points are the nature of cost accounting:\">The following points are the nature of cost accounting:<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1 class=\"has-text-align-center wp-block-heading\" id=\"nature-of-cost-accounting\"><span class=\"ez-toc-section\" id=\"NATURE_OF_COST_ACCOUNTING\"><\/span>NATURE OF COST ACCOUNTING<span class=\"ez-toc-section-end\"><\/span><\/h1>\n\n\n\n<p class=\"has-medium-font-size\"><a aria-label=\"Cost Accounting (opens in a new tab)\" href=\"https:\/\/commerceiets.com\/cost-accounting\/\" target=\"_blank\" rel=\"noreferrer noopener\">Cost Accounting<\/a> is an art or process of recording, analyzing and classifying of expenditure for the purpose of product costing or service costing, ascertainment of profitability, operational planning and cost control. It is a forward looking approach which is related to the recording, analyzing and classifying of expenditure with the objective of ascertaining the total and per unit cost of product or service. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"the-following-points-are-the-nature-of-cost-accounting\"><span class=\"ez-toc-section\" id=\"The_following_points_are_the_nature_of_cost_accounting\"><\/span>The following points are the nature of cost accounting:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"960\" height=\"720\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Slide8-1.jpg\" alt=\"NATURE OF COST ACCOUNTING\" class=\"wp-image-2734\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Slide8-1.jpg 960w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Slide8-1-300x225.jpg 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/11\/Slide8-1-768x576.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><figcaption>NATURE OF COST ACCOUNTING<\/figcaption><\/figure>\n\n\n\n<p class=\"has-medium-font-size\"><strong>A BRANCH OF ACCOUNTING<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Cost Accounting is a branch of accounting that deals\nspecifically with the determination of costs of the products and services being\nmanufactured. It deals with those techniques, tools, processes and methods\nwhich are associated with the determination of costs, their classification and\nanalysis. It is an accounting which is done internally to the organization and\nis optional.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>BRANCH OF KNOWLEDGE<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">It is an important branch of knowledge and emerges as a\ndiscipline in itself. It is an organize body of knowledge which has its own\ntools and techniques like<\/p>\n\n\n\n<ul><li>Job costing<\/li><li>Process costing<\/li><li>Standard costing<\/li><li>Marginal costing<\/li><li>Variance analysis<\/li><li>Unit costing<\/li><li>Batch costing<\/li><li>Activity based costing<\/li><li>Budgetary control<\/li><li>Contract costing etc.<\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\"><strong>COST ACCOUNTING IS SCIENCE AND AN ART<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Cost accounting is both science and an art but not a perfect\nscience.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>It is science<\/strong> as it is a body of systematic knowledge relating to not only accounting but also to a wide variety of subjects such as law, office practices, data processing, production and material control etc.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>It is an art<\/strong> as it involves the use of the skills and experience of cost accountant in collection, classification and analysis of the costs of the products.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>COST ACCOUNTING IS A PROFESSION<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Cost accounting is not a pure profession by nature but it is\nemerging as a profession. The set up of various specialized institutions like<\/p>\n\n\n\n<ul><li>Institute of Cost and Management Accountants in\nUK<\/li><li>Institute of Cost and Work Accountants in India <\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\">Is a way long to make cost accounting as a profession.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>BASED ON DOUBLE ENTRY SYSTEM<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Cost accounting is based on the double entry system. It is\nfollows the rule of \u2018every debit has equal credit.\u2019 All transactions that are\nrecorded in the cost accounting records have two fold aspect.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>A PROCESS IN NATURE<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Cost accounting is a process in nature. It is a process that\ninvolves the following steps:<\/p>\n\n\n\n<ul><li>Identification of costs<\/li><li>Recording of costs<\/li><li>Classification of costs<\/li><li>Analyzing the costs <\/li><li>Interpreting the results<\/li><li>Communicating the results to the management.<\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\">It is a forward looking approach that aims at improving the\nefficiency of the manufacturing activities. <\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>TOOLS AND TECHNIQUES<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Cost accounting has its own tools and techniques of standard\ncosting and variance analysis, contract costing, process costing, job costing,\nunit costing, batch costing, marginal costing etc. cost accounting make use of\nsuch techniques in preparing the accounting records with full accuracy and also\nfix the standards of performance for future.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>INTERNAL ACCOUNTING<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Costing accounting is an internal accounting. There is no compulsion on the organization to prepare the cost accounting records and publish them. It is totally option to prepare the cost accounting records. These are prepared to provide for the internal use by the management and manufacturing departments. <\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/cost-accounting\/\">Cost Accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/scope-of-cost-accounting-pdf\/\">Scope of cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/elements-of-cost\/\">Elements of cost<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/types-of-cost\/\">Types of cost<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/\">Material control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/perpetual-inventory-system\/\">Perpetual inventory system<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/pricing-of-materials\/\">Pricing of materials<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/bin-card\/\">Bin Card<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/store-ledger\/\">Stores Ledger<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/incentive-plans\/\">Incentive plans<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/overhead\/\">Overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/accounting-treatment-of-idle-time\/\">Idle time<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/system-of-wage-payment-in-cost-accounting\/\">System of wage payment in cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-time-rate-system-and-piece-rate-system\/\">Time rate vs piece rate wage system<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-centre\/\">Cost Center<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/labor-turnover\/\">Labour Turnover<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/difference-between-management-accounting-and-cost-accounting\/\">Difference between management accounting and cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/allocation-and-apportionment-of-overheads\/\">Allocation and apportionment of overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-allocation-and-apportionment-of-overheads\/\">Allocation vs Apportionment of overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/absorption-of-overheads\/\">Absorption of overheads<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/over-absorption-and-under-absorption-of-overheads\/\">Over absorption and under absorption of overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/activity-based-costing\/\">Activity based costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-traditional-costing-and-activity-based-costing\/\">Traditional costing vs ABC system<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/reconciliation-of-accounts\/\">Reconciliation of accounts<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/unit-costing\/\">Unit costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-sheet-format\/\">Cost sheet format<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-sheet-vs-production-account\/\">Cost sheet vs production sheet<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/job-costing\/\">Job costing<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/batch-costing\/\">Batch Costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-job-costing-and-batch-costing\/\">job costing vs batch costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/contract-costing\/\">Contract costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-job-costing-and-contract-costing\/\">Job Costing vs Contract costing<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/process-costing\/\">Process Costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/process-costing-vs-job-costing\/\">Process costing vs job costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/joint-products\/\">Joint products<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/by-products\/\">By Product&nbsp;<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/equivalent-production\/\">Equivalent production<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/marginal-costing\/\">Marginal costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/applications-of-marginal-costing\/\">Application of marginal costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-volume-profit-analysis\/\">Cost volume profit analysis<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/tools-and-techniques-of-marginal-costing\/\">Tools and techniques of marginal costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/budget\/\">Budget<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/break-even-point\/\">Break even point<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/process-of-budgetary-control\/\">Process of budgetary control<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/explain-the-advantages-and-limitations-of-budgetary-control\/\">Advantages and limitations of budgetary control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/budgetary-control\/\">Budgetary Control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/zero-base-budgeting\/\">Zero base budgeting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/standard-costing\/\">Standard Costing<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/variance-analysis\/\">Variance Analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-standard-costing-and-budgetary-control\/\">Standard costing vs budgetary control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-management-accounting-and-cost-accounting\/\">Management accounting vs cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-financial-accounting-management-accounting-and-cost-accounting\/\">Cost accounting vs financial accounting<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noreferrer noopener\">CONNECT ON LINKEDIN<\/a><\/div>\n<\/div>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"152\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-cropped-Presentation-resize-1.jpg\" alt=\"Difference between Financial Accounting Management Accounting and Cost accounting\" class=\"wp-image-4836\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-cropped-Presentation-resize-1.jpg 512w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-cropped-Presentation-resize-1-300x89.jpg 300w\" sizes=\"(max-width: 512px) 100vw, 512px\" \/><figcaption>NATURE OF COST ACCOUNTING<\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>NATURE OF COST ACCOUNTING Cost Accounting is an art or process of recording, analyzing and classifying of expenditure for the purpose of product costing or service costing, ascertainment of profitability, operational planning and cost control. It is a forward looking approach which is related to the recording, analyzing and classifying of expenditure with the objective&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/nature-of-cost-accounting\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;NATURE OF COST ACCOUNTING&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":2737,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[187],"tags":[189],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/2733"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=2733"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/2733\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/2737"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=2733"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=2733"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=2733"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}