Government Cost Accounting Standards | 19 Cost Accounting Standards
Government Cost Accounting Standards refers to that approved accounting principles which is been uphold by the cost accounting standards board (CASB).
These cost accounting standards are a set of broad policies established the governing of the United State and it is sponsored to help project the financial administration and accounting process of a firm.
The government cost accounting standards (GCAS) are contained in the secluded document numbered;
- 48 CFR 9905.501
These articles of cost accounting were for some reasons included in the latest revised and improved cost principles which could be found in the Uniform Guidance in the 2 CFR 200 which is at Part 200.419.
Government cost accounting standards considers a lot of government policies which tries to affect workings in the accounting system, administrative sections such as costing an aid to management.
Government Cost accounting Standards As An Aid To Management
It can easily be established that cost accounting standards help in the proper management of limited resources available to government, however, even though that manufacturers nowadays are now realizing the willingness to accept as a principles that costing is of value to their business, there can still be a considerable lack of appreciation by many of them as to where its value lies.
It is also the responsibility of the cost accounting standards board to figure out the costing enabling a business not to find out what various jobs or processes have cost but also should have a cost. This includes where losses and waste are occurring before the work is finished and therefore, immediately an action is taken, if possible to avoid such a loss or waste.
Business policy are required to follow the government cost accounting standards, since it may require the consideration of alternative methods and procedure and this is fascinated by the cost information correctly presented. For instance, by the aid of cost reports, management could decide whether the manufacturer of certain products increases over-heads expenditure, disproportionately, whether to treat by-products, even if at a loss, to make possible a more important trade in another product.
Whether the plant and machinery could be used more advantageously by concentrating on particular products to the exclusion of less profitable one or whether prices could or should be adjusted.
Purposes Of Cost Accounting (government cost accounting standards)
The major obstacle facing most of the decision made based on the government cost accounting standards is that management of every going concerned is the inability to seek out to know how much it would cost administers their businesses or how much it may cost to get unit of products or services. The cost accounting can assist that as a purpose.
However, the following are other purposes or aim for which cost accounting is existing;
- First is to assist the management in all ramifications, through the adequate provision of the relevant information by which the management takes decision.
- To help serve as a grade towards fixing of prices of good as well as products or services.
- To assist in settling standards of performance and adequate provision of information for control purposes to help to determine the unit cost of products, job, process, operation or department by close analysis of all expenditures.
- To help provide comparative statement of cost in which the cost of current period are compared with the cost of a previous period or more vitality with the budgeted cost.
- Management can identify inefficiencies and waste as may be revealed.
- To help in the determination of cost stalk of materials carried in financial statement.
- To help in the easy preparation of feasibility studies of new projects by assembling out all the element budgets.
- Too help get enabling information which can either reject or accept an order.
- To help determine the level of quantity of the products that should be produced and sold.
- To help also determine how an increase to workers wages or salaries will affect productivity and profitability of the going concerns.
- To assist in the generation of data for use in order to increase determination.
- To assist in the explanation of the sources of profit or loss revealed in the profit or loss account.
Differences Between Cost Accounting And Financial Accounting
The standard cost accounting procedure cannot be separated for the approved government cost accounting standards, however, both financial accounting, cost accounting, taxation accounting, auditing as said to be management accounting due to the fact that all of these are geared towards assisting the management in all ramification and they function as information giver.
That is to say that the management uses these accounting standards to therefore make managerial decisions.