In the field of accounting, cost accounting has immense importance. Cost accounting helps assess the price of goods, manage costs, and make suitable decisions. “Today we will learn Top “20” Questions and Answers-Introduction to Cost Accounting.”
So lets get started.
Questions and Answers- Introduction to Cost Accounting
Question-01: What is cost accounting?
Answer: Cost accounting addresses the information requirements of both financial and management accounting by providing external parties (stockholders, creditors, and different regulatory bodies) with product cost information for investment and credit decisions and reporting purposes, as well as internal managers for performance planning, control, decision-making, and evaluation.
Question-02: What are the purposes of costing?
Answer: The purposes of costing are as follows:
- Valuation of Inventory
- To record cost.
- Pricing of products
- Making decisions
Question-03: What are the three key features of cost accounting?
Answer: The three key features of cost accounting are as follows
- The calculation of the cost of goods, services, and other objects of value;
- Obtaining planning and control information and performance evaluation; and
- Analysis of specific information to make decision
Question-04: What is the Cost Management System?
Answer: A cost management system is a set of formal methods developed to plan and control the cost-generating activities of an organization about its strategy, aims, and objectives.
Question-05: What is the scope of cost accounting?
Answer: The scope of cost accounting includes the following activities:
- Cost ascertainment
- Cost analysis
- Cost comparisons
- Cost control
- Cost reports
- Budgeting Cost audit
Question-06: What are the steps of the cost accounting Cycle?
Answer: Cost accounting cycle includes:
- Recording costs data
- Cost Classification
- Total cost determination
- Unit Cost Determination
- Sale Price Determination
- Cost Control and Take Decisions.
Question-07: What is the importance of Cost Accounting?
Answer: The importance of cost accounting is as follows:
- Assists in reducing costs
- Cost Ascertainment.
- Identifying unprofitable activities.
- Wastage removal
- Control Inventory.
Question-08: What are the methods of costing?
Answer: The methods of costing are
- Job Order Costing
- Contract costing
- Batch costing
- Process Costing
- Service Costing
- Multiple Costing
Question-09: What is target costing?
Answer: Target costing is an approach that calculates what a product or service can cost, less a target profit, based on its sales price.
Question-10: What is Job Order Costing?
Answer: Job costing is a costing method that assigns costs to substantially different distinct production jobs.
Question-11: What is contract costing?
Answer: For construction related works such as bridges, dams, houses, civil engineering contracts, etc., contract costs are applied.
Question-12: What is Process Costing?
Answer: Process costing is a method of cost of operations that is used where masses of uniform commodities are generated by identical or similar units of product or service.
Question-13: What is Service Costing?
Answer: Service costing is practiced in a company that offers services where the cost of delivering a service is calculated.
Question-14: What is batch costing?
Answer: Batch costing is a costing system in which the item in question is manufactured step by step over various workstations and various batches of articles are produced.
Question-15: What is multiple costing?
Answer: A combination of two or more costing methods is a multiple costing system. This form of costing applies to industries with several different components of their product, such as motor vehicles, airplanes, computers, air conditioners, etc.
Question-16: What is flexible manufacturing systems?
Answer: Flexible manufacturing processes focus on large-scale production of common goods to highly automated workshop environments.
Question-17: What is Total Quality Management (TQM)?
Answer: Total Quality Management (TQM) is a continuous improvement mechanism to achieve maximum customer satisfaction.
Question-18: What is just in Time (JIT)?
Answer: By achieving a continuous production process, Just in Time (JIT) reduces inventories.
Question-19: What is the balanced scorecard (BSC)?
Answer: The balanced scorecard (BSC) translates an organization’s mission and strategy into a series of success metrics that provide the basis for the process to be executed.
Question-20: What is life cycle costing?
Answer: The life cycle costing records and collects the costs related to each product or service from its initial research and development to final consumer marketing.
I hope you have a basic idea about the “introduction to cost accounting” at the end of the post. Read these Top “20” Questions and Answers- Introduction to Cost accounting regularly and develop your accounting skills.
You may also read: