Introduction to Cost Accounting
Accounting is the collection and aggregation of information for decision-makers – including managers, investors, regulators, lenders, and the public. Cost accounting has emerged as a specialized branch of accounting because of the limitations of financial accounting. It helps in determining the cost of products or services. Cost accounting provides for an analysis of expenditure which enables the management to know not only the total cost of the products manufactured but also its constituents. Good cost accounting is vital to understand the profitability of current activities and predict the profitability of future activities.
In this chapter, we shall study the concept and nature of cost accounting. We will also discuss various elements of cost and costing methods. At the end of the chapter, we will study about limitations of cost accounting.