COST ACCOUNTING ALERT : INTRODUCTION

 INTRODUCTION TO 
COST ACCOUNTING 

LEARNING OBJECTIVES

1. Distinguished between financial, managerial, and cost accounting.

2. Distinguished between merchandising and manufacturing operations.

3. Identify the uses of cost accounting data

4. Distinguished between job order costing and Process costing.

INTRODUCTION

Cost accounting is incredibly important not only for its users but also for the economy as a whole. It is primarily used by organizations to make decisions. Cost accounting provides a wealth of financial information, encompassing both financial accounting and managerial components. In essence, it offers a comprehensive package of financial insights.

USERS

There are two types of users when it comes to financial information. These two types have their own needs and roles regarding financial information. Despite their different needs, both types of users have one common goal for financial information, which is to aid decision-making.

INFOGRAPHIC 

BUSINESS

To understand the importance of an efficient cost system, an organization must first identify the nature of its manufacturing and merchandising processes. This topic discusses two forms of business: manufacturing and merchandising. While these are different approaches to business, they are very similar when it comes to purchasing, storing, and selling goods. Both require efficient management and adequate sources of capital, and both may employ hundreds or thousands of workers.

BIG THREE BRANCHES OF ACCOUNTING

Financial, Managerial, and Cost Accounting are three branches of accounting. Each has its own unique characteristics and similarities. It's important to pronounce these terms correctly and to understand how to apply them to business. Each branch has its own approach to business, and this depends on the type of business you are dealing with. The interesting thing is that there's no guaranteed mistake when applying cost accounting because it encompasses components of both financial accounting and managerial accounting. Cost accounting is a reliable approach that combines aspects of both financial and managerial accounting.

PRODUCT COSTING

When it comes to the product system, you are free to choose the type of business you want to pursue in the future. The cost of your business may vary depending on the type of business you are in. You can use job-order costing or process costing. It's best to determine this early on so that the process can proceed as planned. The cost estimation varies depending on the approach chosen. It's better to take the time to estimate costs properly rather than rushing into the process without a clear understanding. It's preferable to avoid mistakes rather than deal with the consequences later. In the process of costing, there's only one outcome - either profit or loss, never both, so it's important to be cautious.

                                          

CONCLUSION

Starting a business is scary and risky, but that is how you start a business it is just a matter of trust and application of this lesson. Trusting the process is quite healthy too. Business is made that way ‘cause honestly who does not want thrill and winning? Having a better understanding of this topic will not guarantee your success but it’s almost there. Not quite far but not quite near either. This lesson will give the point of view of business. This topic also welcomes you to the business world that’s why it is important that before starting a business you must learn first, that is the foundation of your success. You can always win and fail and that’s a matter of your knowledge.

YOU? WHAT IS YOUR DREAM JOB?

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