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Assignment 1 and 2

This document contains two assignments on cost accounting. The first assignment discusses the differences between cost accounting and financial accounting. It notes that cost accounting provides more detailed internal reports for management, is less regulated, and can include both financial and operational data, unlike financial accounting reports. The second assignment lists 10 uses of cost accounting, such as ascertaining costs, controlling costs, decision making, setting prices, measuring efficiency, budget preparation, identifying losses, cost comparisons, improving productivity, and inventory control.

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Assad Jafri
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© © All Rights Reserved
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Download as DOC, PDF, TXT or read online on Scribd
55 views

Assignment 1 and 2

This document contains two assignments on cost accounting. The first assignment discusses the differences between cost accounting and financial accounting. It notes that cost accounting provides more detailed internal reports for management, is less regulated, and can include both financial and operational data, unlike financial accounting reports. The second assignment lists 10 uses of cost accounting, such as ascertaining costs, controlling costs, decision making, setting prices, measuring efficiency, budget preparation, identifying losses, cost comparisons, improving productivity, and inventory control.

Uploaded by

Assad Jafri
Copyright
© © All Rights Reserved
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Assignment:

COST ACCOUNTING

Submitted to:
Sir M. Burhan

Submitted by:
Sundus shehzad (25672)

1
ASSIGNMENT NO.1:

 DIFFENCE BETWEEN COST ACCOUNTING


AND FINANCIAL ACCOUNTING:

1. Audience:
Financial accounting involves the preparation of a standard set of reports for an
outside audience which may include investors’ creditors and regulatory agencies.
Cost accounting involves the preparation of a broad range of reports that
management needs to run a business.

2. Format:
The reports prepared under financial accounting are highly specific in their format
and content as mandated by either generally accepted accounting principals or financial
reporting standards.
Cost accounting involves creating reports that can be in any format specified the
management.

3. Regulatory Framework:
The structure of financial reports is tightly governed by the accounting principals
and standards.
There is a no regulatory framework governing in cost accounting reports.

4. Level of detail:
Financial accounting is primarily focus on reporting the results and financial
position of an entire business entity.
Cost accounting usually results at a much higher level of detail within the
company.

5. Report Content:
A financial report contains an aggregation of the financial information recorded
through the accounting system.
The information in a cost accounting report can contain both financial and
operational information.

6. Report Timing:
Financial accounting personnel issue reports only at the end of a reporting period.
Cost accounting staff may issue reports at any time and with any degree of frequency.

2
ASSIGNMENT NO.2:

 USES OF COST ACCOUNTING:


1. Helps in Ascertainment :
Cost accounting helps in the ascertainment of cost of each product process job
activities etc by using different methods.

2. Helps in Control of cost:


It helps in control of material costs labor costs and overheads by using different
techniques.

3. Helps in decision making:


It helps the management to take various decisions like;
 buying of material
 continue or shutdown operations
 accept order below cost or not
 reduction in selling price
 retain or replace existing machinery
 and other decisions

4. Helps in fixing selling prices:


It helps the management in fixing selling prices of a product by providing
detailed cost information.

5. Helps in measurements of efficiency:


It helps in measurements of efficiency of operations through establishment of
standards and variances analysis.

6. Helps in preparation of Budget:


It helps in various budgets such as;
 Sales
 Production
 Purchases
 Man-power
 Overheads

7. Helps in material losses:


It also helps in identification of loss material such as;
 Wastage
 Scrap
 Spoilage
 Defective

3
8. Helps in cost comparison:
It helps in such comparisons;
 Comparison with standard figures
 Inter-firm comparison
 Pattern comparison

9. Helps in improving productivity:


It helps in improving of productivity of material and labors.

10. Helps in inventory control:


It helps in inventory by using various techniques;
 Stock levels
 Perpetual inventory system
 Inventory turnover ratio etc

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