Sagacious- Functions of cost accounting- 57 Rupinder Kaur(A), 117 Saumya Rastogi(B), 184 Vikrant Thakur(C)

INTRODUCTION: 57 Rupinder Kaur (A)
Cost accounting method of accounting in which all costs incurred in carrying out an activity or accomplishing a purpose are collected, classified, and recorded. This data is then summarized and analyzed to arrive at a selling price, or to determine where savings are possible. In contrast to financial accounting (which considers money as the measure of economic performance) cost accounting considers money as the economic factor of production.

DISCUSSION: 117 Saumya Rastogi (B)
There are various functions of cost accounting in various departments of business which are given below
-Fixing selling Prices by providing detailed cost information.
-Inventory Control, cost furnishes control in respect of stock material, work in progress and finished goods.
-Costing records provide basis upon which tender and estimates may be prepared.
-Creditors, suppliers, investor’s financial institution and other moneylenders judgment about the profitability and prospects of the enterprise depends upon the studies and reports submitted by the cost accountant.
-Data Base for operating policy, cost Accounting offers a thoroughly analyzed cost data for formulating policy regarding day to day business transactions and activities, such as:
*Whether to shut down or continue producing and selling at below Cost?
*Whether to repair an old plant or to replace it?
-Accuracy of financial account with the help of reconciliation of the profit as per financial accounts and with the profit as per cost account.

Cost accounting is essential for business but it also contains some drawbacks with their beneficial features such as:
-It is expensive analysis, allocation and absorption of overheads requires considerable amount of additional work.
-The results shown by cost accounts differ from those shown by financial accounts. Preparation of reconciliation statements is necessary to verify their accuracy. This leads to unnecessary increase in workload.

CONCLUSION: 184 Vikrant Thakur (C)
According to me, cost accounting is adaptable feature for business because it provides essential information to various departments not only to internal users but to external users as well but excess of applying cost accounting to business may leads to increase in workload.

REFERENCE:

http://www.google.co.in/search?hl=&q=functions+of+cost+accounting&sourceid=navclient-ff&rlz=1B3GGLL_enIN385IN385&ie=UTF-8&aq=0h&oq=fu

http://en.wikipedia.org/wiki/Cost_accounting