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Manpreet Kaur, Lovely Professional University                       Unit 1: Introduction to Cost Accounting




                       Unit 1: Introduction to Cost Accounting                                  Notes


             CONTENTS

             Objectives
             Introduction
             1.1   Meaning and Definition of Cost Accounting

             1.2   Scope and Use of Cost Accounting
             1.3   Relationship between Financial Accounting and Cost Accounting

             1.4   Role of Cost Accounting in Decision Making
             1.5  Cost Concepts
                 1.5.1 Cost Unit
                 1.5.2 Cost Centre

             1.6   Elements of Cost
             1.7  Classification of Costs

                 1.7.1 General Classifi cation
                 1.7.2 Technical Classifi cation
             1.8   Cost Accounting System

             1.9  Summary
             1.10 Keywords
             1.11 Review Questions
             1.12 Further Readings

          Objectives


          After studying this unit, you will be able to:

               Explain the meaning and definition of cost accounting
               Discuss the scope and uses of cost accounting

               Describe the relationship between financial accounting and cost accounting
               State the role of cost accounting in decision making
               List the elements of cost

               Make classification of cost
               Describe costing system

          Introduction

          Cost accounting is a branch of accounting and has been developed due to limitations of fi nancial

          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 profi t, profit and loss that the business or enterprise

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