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8/9/2019 Chapteri Basicconcepts 100217174049 Phpapp01
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Basic Concepts
Cost & ManagementAccounting-I
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Cost- “ the amount ofexpenditure (actual or
notional) incurred on, orattributable to a speciedthing or acti!it"#-CIMA,
$ondonCosting-#the techni%ues andprocesses of ascertaining
#-
Meaning & enition
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“Cost Accounting is theapplication of accounting and
costing principles, methodsand techni%ues in theascertainment of costs and
the anal"sis of sa!ings and'orexcesses as compared ith
pre!ious experience or ith#-
Cost Accounting
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“ the application of costing andcost accounting principles, methodsand techni%ues to the science, art
and practice of cost control and theascertainment of protabilit" Itincludes presentation of information
for the purpose of managerialdecision-ma*ing#-CIMA, $ondon
Cost Accountanc"
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Cost Ascertainment
Cost +!aluation
Cost Control
Cost eduction
rice .ixing
ata for ecision-ma*ing/ le!el of
output roduct 0mix, protabilit" ofproducts and processes, comparati!ecost schedules
1b2ecti!es of Cost Accounting
i i i f i i l
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$imitations of .inancialAccounting
3istorical
4nclassied
5hole 1rganisation
6o Material Control6o 5age Control
6o 1!erheads
Control6o 6ormalc"
Approach
6o Cost +!aluation
rice .ixationdi7cult
6o Cost eduction
8enders &9uotations
ata for eporting
+limination of lossManipulation
6o Comparison
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Financial
Accounting
+xternal eporting
Annual eporting
3istorical
1b2ecti!e Information
5holesome Approach
Compulsor"
igid reparation
Accurate
Independent
Audit
Internal eporting
eriodic eporting
3istorical'rospecti!e
:ub2ecti!e i!isional
;oluntar"
.lexibilit"
Approximation
dependant 6o Audit
i
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+7cient Management ofesources
+limination of 5astagesCost Control.acilitating rice .ixation3elping ecision-ma*ingreparation of Budgets
rot lanning
Ad!antages of Cost Accounting
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.air 5ages
ecognition of +7cienc"
Incenti!e :"stem of a"ment
Cordial elation
3igher :hare of rot
Ad!antages to 5or*ers
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esol!ing 8ax isputesolic" .raminglanningrice Control
Measuring +7cienc"9uantum of :ubsid"
Ad!antages to the=o!ernment
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5here the 1b2ecti!e is costascertainment/
rocess Costing/ 4nit Costing,1perating Costing, and 1perationCosting
>ob Costing/ >ob Costing, Batch Costingand Contract Costing
Methods of Costing
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5here the ob2ecti!e iscost e!aluation/
:tandard Costing3istorical Costing
:"stems of Costing/
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5here the ob2ecti!e is costcontrol and cost reduction/
Marginal costing
Absorption Costing
8echni%ues of Costing
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