Cost Accounting Standards Training | The Concept And Discipline Of Cost Accounting
Cost accounting standards concept is an intriguing subject that has not been duly treated, perhaps due its complicating nature, finding its roots from cost account.
However, on this post I will be discussing all I know you should have knowledge of when it comes to cost accounting standards. First of all, we must consider the definition of the phrase cost accounting.
What Is Cost Accounting Standards
Cost accounting standards which on most occasions is referred to as (CAS) consist of the stipulated 19 approved standards as well as the rules as was promulgated by the American (USA) Government, this standard of cost accounting was designed to be used in the determination of costs of negotiated procurements. A clearer picture paints accounting as one of the discipline that had terms which refers to the numerous recording of activities carried due to business transactions (mainly facts and figures).
Accounting as an information technique, reports widely on individuals and interested people as well as parties as the case may be that costing is a process matching concept.
Cost accounting standards as part of cost accounting alone had been the only door opener as far as industrial revolution was concerned before and after the world war I. It was on record that the growing demand caused by the enormous growing competition that saw the emergence of cost or cost account as a discipline to differentiate what accounting is, in essence, financial accounting does as its role from what cost account does too such as controlling pricing.
For instance, during the world war I, many authorities then decided to make laws which only placed effect almost on price control over price polices due to the growing or expanding competition between manufacturers and governments on their parts to control prices of commodities . it is based on this singular motive it became important to manufacturer to;
- Add value to quality products
- Develop the cost accounting standards for every products
- Take control of every cost at all level.
Therefore, financial accounting as the case may be could not tackle mush to achieve the objective especially in price control purpose. It was based on this background that it became a challenge to think the best way of unveiling the new techniques to squarely control the cost of goods sold account (price). Thus to unveil the technique gave birth to what is today called cost accounting.
Again, it is also important to note that both the cost accounting standards as well as financial accounting has certain limitation for which cost accounting covering different areas with its own limitation too. For instance, financial accounting emerged as a result of defunct of barter system, the same road map was created for cost accounting.
Financial accounting most times has difficulty in coping with the financial recording of activities of both financial and cost altogether. Therefore, there must be course to be separated due to the fact that people are concerned with the cost and the implications too.
Cost Accounting Definition
Cost accounting can be defined as the process of collecting, summarizing, analyzing as well as reporting in monetary terms, the information to management showing the cost and benefits of pursuing each alternative course of action that is possibly open to management.
Cost accounting can as well be seen as the application of cost and cost accounting principles, methods and the ascertainment of profitability. This includes the presentation of information derived therefore for the purpose of managerial decision making.
Accounting to Mathews (1982) cost accounting is almost the same way as standard cost accounting, however, in addition analysis of savings and or excess expenditures where actual cost differs from the previous experience or from standards.