study material on accounting

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OBJECTIVE OF COST ACCOUNTING:

1) To analyze and classify all expenditure with reference to the cost of products and operation

2) To arrive at the cost of production of every unit, job, operation, process, department or services and to develop cost standards.

3) To indicate to the measurement ant inefficient and the extent of various forms of waste weather material, time, expense or in the use of machinery, equipment and tools. Analysis of the cause of unsatisfactory result may indicate remedial measure.

4) to provide data for periodical profit and loss accounts and balance sheets at such intervals e.g. weekly, monthly or quarterly, as many as desired by the management during the financial year, not only for the whole business but also by department or individual products.

5) To provide actual figure of cost for comparison with estimates and to serve as guide for future estimate or quotation and to assist the management in their price fixing policy.

6) To show, where standard cost are prepared, what the cost of production is to be and with which the actual cost which are eventually recorded may be compared,

7) To present comparative cost for data for different periods and various volumes and to provide guidance in the development of business. This is also helpful recorded may be compared. 8) To indicate weather the cost of certain article or component made in factory is such that it would be more economical to buy from outside sources.

9) To record the relative production result of each unit of plant and machinery in use as a basis for examining its efficiency.

10) To explain in detail the sources of profit or loss revealed in total, in profit and loss account.

11) to provide a perpetual inventory of stores and other material so that interim profit and loss account and balance sheet can be prepared without stock taking and check on stores and adjustment are made at frequent intervals.