ACCOUNTING COST CONCEPT

ALL ABOUT ACCOUNTING  :- 22nd BLOG

   ☆☆☆ACCOUNTING☆☆☆

Hi freinds., 🙏

Today's discuss 5th concept of accounting....

                                             So let's discuss ..... 

 ★ ACCOUNTING COST CONCEPT :-

Accounting cost concept states that all assets are recorded in the books of accounts at their purchase price, Which includes cost of acquisition, transportation and installation and not at it's market price. It means that fixed assets like building 🏢 machinery and furniture, etc are recorded in the books of accounts at a price paid for them. For eg : a plant and machinery was purchased by M/S.  ABC PVT. LTD.  for rupees ₹10,00,000 , for manufacturing fabrics. An amount of ₹ 500 were spent on transporting the machine to the factory site. In addition ,Rs. ₹ 1000 were spent on it's installation. The total amount at which the machine will be recorded in the books of accounts would be the sum of all these items I.e. ₹ 10,01,500. This cost is also known as historical cost. Suppose the market 💹 price of the same is now ₹ 1,00,000 it will not be shown at this value. Further, it may be clarified that cost means original or acquisition coat only for new assets and for the used ones, cost means original cost lesa depreciation. The cost concept is also known as historical cost concept. The effect of cost concept is that if the business entity does not 🙅 pay anything for acquiring an asset this item would not 🙅 appear in the books of accounts. Thus, goodwill

Appears in the accounts only if the entity has purchased this intangible asset for a Price. 

* USAGE OF COST ACCOUNTING :- 

Cost accounting, also sometimes known as management accounting, provides appropriate cost information for budgeting systems and management decision making. Using the principles of general accounting, cost accounting records and determines costs associated with various functions of the business. These data are used by management to improve operations and make them more efficient, economical, and profitabl system.

* BUDGETING COST ACCOUNTING 

SYSTEM :- 

Budgeting systems rely on accurate cost accounting systems. Using cost data collected by the business's cost accounting system, budgets can be developed for each department at different levels of output. Different units within the business can be designated cost centers, profit centers, or departments. Budgets are then used as a management tool to measure performance, among other things. Performance is measured by the extent to which actual figures deviate from budgeted amounts.

* TYPES OF COST CONCEPTS :-

Majorly three types of cost concept :- 

• FIXED AND VARIABLE COSTS :-

The two basic types of costs incurred by businesses are fixed and variable. Fixed costs do not vary with output, while variable costs do. Fixed costs are sometimes called overhead costs. They are incurred whether a firm manufacturers 100 dress or 1,000 dress. In preparing a budget, fixed costs may include rent, depreciation, and supervisors' salaries. Manufacturing overhead may include such items as property taxes and insurance. These fixed costs remain constant in spite of changes in output.

     Variable costs, on the other hand, fluctuate in direct proportion to changes in output. In a production facility, labor and material costs are usually variable costs that increase as the volume of production increases. It takes more labor and material to produce more output, so the cost of labor and material varies in direct proportion to the volume of output.     

• DIRECT AND INDIRECT COSTS :- 

Direct costs are similar to variable costs. They can be directly attributed to the production of output. The system of valuing inventories called direct costing is also known as variable costing. Under this accounting system only those costs that vary directly with the volume of production are charged to products as they are manufactured. The value of inventory is the sum of direct material, direct labor, and all variable manufacturing costs.

              Indirect costs, on the other hand, are similar to fixed costs. They are not directly related to the volume of output. Indirect costs in a manufacturing plant may include supervisors' salaries, indirect labor, factory supplies used, taxes, utilities, depreciation on building and equipment, factory rent, tools expense, and patent expense. These indirect costs are sometimes referred to as manufacturing overhead.     

• PRODUCT AND PERIOD COSTS :- 

The concepts of product and period costs are similar to direct and indirect costs. Product costs are those that the firm's accounting system associates directly with output and that are used to value inventory. Period costs are charged as expenses to the current period. Under direct costing, period costs are not viewed as costs of the products being manufactured, so they are not associated with valuing inventories.

           If the firm uses a full cost accounting system, however, then all manufacturing costs—including fixed manufacturing overhead costs and variable costs—become product costs. They are considered part of the cost of manufacturing and are charged against inventory.  

★Remaining 4 concepts discuss in 23rd  blog....★ 
                                      
                                          So wait my 23rd blog....★

     

                    __________________________
                    ★★★★★★★★★★
                  -----------------------------------------
               
* Buy some income tax act books :- 
https://www.amazon.in/gp/product/B081X3Z33T/ref=as_li_qf_asin_il_tl?ie=UTF8&tag=mayurthakare21&creative=24630&linkCode=as2&creativeASIN=B081X3Z33T&linkId=d07f15677e03bc6f99e141a23d61eccb

* Buy some printing bill calculators with
 tax :-
https://www.amazon.in/gp/product/B07CYCTXPJ/ref=as_li_qf_asin_il_tl?ie=UTF8&tag=mayurthakare-21&creative=24630&linkCode=as2&creativeASIN=B07CYCTXPJ&linkId=5f5755a5d662e464acab3ad74d86c543

* Buy some accounting finance related 
books:- 
https://www.amazon.in/gp/search/ref=as_li_qf_sp_sr_il_tl?ie=UTF8&tag=mayurthakare-21&keywords=Finance&index=aps&camp=3638&creative=24630&linkCode=xm2&linkId=1ec73ab103c9d619c512516e8800d1cb

* Buy some revenue recognition books :- 
https://www.amazon.in/gp/search/ref=as_li_qf_sp_sr_il_tl?ie=UTF8&tag=mayurthakare-21&keywords=Revenuerecognition&index=aps&camp=3638&creative=24630&linkCode=xm2&linkId=9b90ab802d54a94e7b5f903792a55657

* Buy some books for conservatism principle in accounting :- 
https://www.amazon.in/gp/product/B00EUEYHUG/ref=as_li_qf_asin_il_tl?ie=UTF8&tag=mayurthakare-21&creative=24630&linkCode=as2&creativeASIN=B00EUEYHUG&linkId=f32b1b7e52cda61cc09ae8a3b2015dd1

* Buy some historical cost accounting books :-
https://www.amazon.in/gp/product/0415554292/ref=as_li_qf_asin_il_tl?ie=UTF8&tag=mayurthakare-21&creative=24630&linkCode=as2&creativeASIN=0415554292&linkId=7aec6727954ef449a1fe3f7134ae9d03

* Buy some pendrives :- 
https://www.amazon.in/gp/search/ref=as_li_qf_sp_sr_il_tl?ie=UTF8&tag=mayurthakare-21&keywords=Pendrives&index=aps&camp=3638&creative=24630&linkCode=xm2&linkId=2a2624be991fb164e8ef7a199b964dc5

* Buy best going concern Principle book help full for your business growth :- 
https://www.amazon.in/gp/product/0124172210/ref=as_li_qf_asin_il_tl?ie=UTF8&tag=mayurthakare-21&creative=24630&linkCode=as2&creativeASIN=0124172210&linkId=8b25403784d08599fd3facaee7121f4b

* Buy some keyboards and computer
 mouse :- 
https://www.amazon.in/gp/search/ref=as_li_qf_sp_sr_il_tl?ie=UTF8&tag=mayurthakare-21&keywords=Keyboards and mouse&index=aps&camp=3638&creative=24630&linkCode=xm2&linkId=ba49cb741b794773f4472f3b7e821378

* Buy, some collar mics :- 
https://www.amazon.in/gp/search/ref=as_li_qf_sp_sr_il_tl?ie=UTF8&tag=mayurthakare-21&keywords=CallarMics&index=aps&camp=3638&creative=24630&linkCode=xm2&linkId=530b6126bbed9e5e8c6a29438e7b8261

* Buy some computer accessoriessories :- 

https://www.amazon.in/gp/search/ref=as_li_qf_sp_sr_il_tl?ie=UTF8&tag=mayurthakare-21&keywords=Computeraccessories&index=aps&camp=3638&creative=24630&linkCode=xm2&linkId=b1e01cfabeb11d4973a68067b15a166a

                                  ★★★★★