Cost accounts

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Cost accounting and management accounting are terms which are often used interchangeably. It is not correct to do so. Cost accounting is concerned with preparing statements (budgets, coasting etc), cost data collection, applying costs to inventory, products and services. Whereas, management accounting is concerned with the using of financial data and communicating it as an information to the users or consumers.

Cost accounting is a part of management accounting. cost accounting provides a bank of data for the management accountant to use. Cost accounts aim to establish the cost of goods produced or services provided, the cost of a department or work section, the revenues, the profitability of a product, a service, a department, or the organisation in total, selling prices with some regard for the costs of sale. It also includes the value of stocks of goods (raw materials, work in progress, finished goods) that are still held in store at the end of a period, thereby aiding the preparation of a balance sheet of the company's assets and liabilities. 

It would be wrong to suppose that cost accounting systems are restricted to manufacturing operations, although they are probably more fully developed in this area of work. Services industries, government departments and welfare activities can all make use of cost accounting information. Within a manufacturing organisation, the cost accounting system should be applied not only to manufacturing but also to administration, selling and distribution, research and developments.

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