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Cost Accounting – II

Notes same effect as an Act made by the Parliament and contravention of the same shall be punishable
with fine as provided in the rules.

9.2.2 Cost Accounting Records Rules and its Applicability

The Cost Accounting Records Rules are applicable only to selected companies incorporated
under the Companies Act, 1956 (whether private or public) and not to other forms of business
such as partnership, proprietary, etc.

A wholly owned subsidiary of a company, to which Cost Accounting Records Rules are applicable,
is also covered by the said record rules provided that the product of such subsidiary company
forms a part/component of cost of production of the product or use of utility/services for the
holding company.
In the case of company manufacturing a product covered by the record rules but the said product
is entirely used as in-house input (captive consumption) for another end product not covered, it
may be clarified that the relevant Cost Accounting Record Rules are applicable to such product
(produced but not sold) and prescribed records have to be maintained with respect to said
product under reference.

Self Assessment

Fill in the blanks:
1. The …………………… Government selects the products (class of company manufacturing
a particular product) for which the cost accounting record rules are proposed to be notified.

2. The …………………… Branch prepares the first preliminary draft of Cost Accounting
Records Rules.
3. The Cost Accounting Records Rules are applicable only to selected companies incorporated
under the Companies Act, 1956 (whether private or public) and not to other forms of
business such as …………………….

9.3 General Provisions under the Various Cost Accounting Records

Rules

Although the Cost Accounting Records Rules prescribed for different industries differ from one
another, the different provisions contained in such Records Rules can be broadly classified into
following three parts:
Part I: Consisting of descriptive rules with short titles, commencement, definition, application
clause, maintenance of records and penal provisions. In some of the Cost Accounting
Records Rules, an Appendix has also been given containing the list of products/items
for which the record rules shall reply.
Part II: Consisting of Schedule with detailed provisions in respect each element of cost like
materials, salary and wages, utilities, depreciation, repairs and maintenance, other
overheads, royalty or technical know-how fee, research & development expenses,
interest and other borrowing costs, related party transactions etc.
Part III: Consisting of various cost statements or performa to be maintained for utilities,
intermediate and final products. The prescribed cost statements in case of process
industries require that the cost of production of each process be shown separately.
Similarly, the rules prescribed in case of engineering industries require the cost

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