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Gopika Juneja, Lovely Professional University Unit 1: Nature and Scope of Cost Accounting

Unit 1: Nature and Scope of Cost Accounting Notes

CONTENTS

Objectives
Introduction
1.1 Meaning and Objectives of Cost Accounting
1.1.1 Meaning of Cost Accounting
1.1.2 Objectives of Cost Accounting
1.2 Nature and Importance of Cost Accounting

1.2.1 Nature of Cost Accounting
1.2.2 Importance of Cost Accounting
1.3 Functions of Cost Accounting
1.4 Limitations of Cost Accounting

1.5 Costing –An Aid to Management
1.6 Relationship and Differences between Financial Accounting and Cost Accounting
1.7 Costing System
1.8 Installation of Cost Accounting
1.9 Summary

1.10 Keywords
1.11 Review Questions
1.12 Further Readings

Objectives

After studying this unit, you will be able to:

z z Know the introduction to cost accounting;
z z Learn the objective and nature of cost accounting;
z z Identify the functions of cost accounting;

z z Identify the limitations of cost accounting;
z z Explain the costing – An aid to management;
z z Describe the difference between financial accounting and cost accounting;
z z Understand the costing system.

Introduction

Cost accounting is a branch of accounting and has been developed due to limitations of financial
accounting. The financial accounting is primarily concerned with record keeping directed
towards the preparation of gross profit account, profit and loss account and balance sheet. It
provides information regarding the gross profit, profit and loss that the business or enterprise

LOVELY PROFESSIONAL UNIVERSITY 1