Introduction to Cost Accounting Flashcards
It is the process of providing financial information about a business to various types of user.
Cost Accounting
These include managers who plan, control, and make decisions.
Internal users
These include the government, those providing funds, and those with various interests in the business.
External Users
It is the process of using accounting information to report to outside parties, such as investors and creditors.
Financial Accounting
What is the primary focus of financial accounting?
It’s the financial statements for use by those who provide funds to the entity and other people who may have financial interest in the firm.
What kind of reports prepared under financial accounting are its focus?
They are focused on the enterprise.
The information used in financial accounting is based on what?
Historical transaction data
The historical transaction data may be what?
Historical
Quantifiable
Monetary
Verifiable
This can be used internally to support financial analysis by management, and is necessary for many organized corporations due to the requirements of SEC.
Financial Accounting; or
Historical Transaction Data
It addresses the needs of stakeholders within the organization rather than outside stakeholders.
Management Accounting
It typically addresses individual or departmental needs rather than the needs of the entire enterprise.
Management Accounting
Most of the data in management accounting are what?
Futuristic
What kind of data is used in the management accounting system?
Financial Accounting Data
What happens if you make management decisions today?
It will have an impact on future financial statements.
It is the intersection between financial and managerial accounting
Cost Accounting
It is needed and used by both financial and managerial accounting
Cost Accounting
Why do cost accounting provide product cost information to external parties?
For credit and investment decisions
Why do cost accounting provide product cost information to internal parties?
For planning and controlling
This kind of company normally buys a product ready for resale upon receiving it.
Merchandising
How to compute the COGS for merchandising company?
Beg. Merchandise Inventory
Add: Purchases
= Cost of Goods Available for Sale
Less: End. Merchandise Inventory
= Cost of Goods Sold
What information is especially important in manufacturing?
Information on costs
Why is explaining the difference in accounting for merchandising and manufacturing important?
Because most of our accounting education is centered around merchandising
This kind of company transforms raw materials into something else the end consumer desired.
Manufacturing
It is defined as the mechanical, physical, or chemical transformation of materials, substances, or components into new products.
Manufacturing
What does the information produced by cost accounting system provide?
Provides a basis for determining product cost and aids management in planning and controlling operations
They help the management in gathering the data needed to determine product costs and generate meaningful FS and other reports
Cost accounting producers
Unit cost information is useful in making a variety of what kind of decision?
Marketing decisions
What are the lists of important marketing decisions?
- Bidding on contracts.
- Analyzing profitability.
- Determining the selling price of a product.
- Metting competition.
