SUBJECT:- Financial & Cost Accounting

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INDIAN SCHOOL OF BUSINESS

MANAGEMENT & ADMINISTRATION

AN ISO 9001 : 2008 CERTIFIED INSTITUTION

SUBJECT:- Financial & Cost Accounting

MARKS :80

Course : BMS (Bachelors In Management Studies)

Name :           

Answer the question in one line.

Q1. Differentiate between Management Accounting and Financial Accounting. (10 marks)

Answer:Management accounting is a field of accounting that analyzes and provides cost information to the internal management for the purposes of planning, controlling and decision making.

Management accounting refers to accounting information developed for managers within an organization. CIMA (Chartered Institute of Management Accountants) defines Management accounting as “Management

Q2. What is the different between cost accounting and management accounting? (10 marks)

Answer:Cost accounting is a sub-set of the more general discipline of Managerial accounting, in the same way that Tax accounting is a sub-set of the more general discipline of Financial accounting. So the scope of managerial accounting is much broader than the scope of cost accounting.Where Managerial accounting helps managers in strategic decision making, devising planning, risk management and the development of performance management systems for the entire organisation, Cost accounting

Q3. State the objectives of cost accounting briefly explain the advantages of cost accounting. (10 marks)

Answer:The main objectives of Cost Accounting are as follows:

(i) Ascertainment of cost:There are two methods of ascertaining costs, viz., Post Costing and Continuous Costing.  Post Costing means, analysis of actual information as recorded in financial books. It is accurate and is useful in the case of "Cost plus Contracts" where price is to be determined finally on the basis of actual cost.  Continuous Costing, aims at collecting information about cost as and when the activity takes place so that as soon as a job is completed the cost of completion would be known. This involves careful estimates being prepared of overheads. In order to be of any use, costing must be a

Q4. “Cost accounting is better understood as a cost control and cost reduction exercise and not a more cost ascertainment process”. Discuss. (10 marks)

Answer:Cost accounting is a process of collecting, analyzing, summarizing and evaluating various alternative courses of action. Its goal is to advise the management on the most appropriate course of action based on the cost efficiency and capability. Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future.

Since managers are making decisions only for their own organization, there is no need for the information to be comparable to similar information from other organizations. Instead, information must be relevant for a particular environment

Q5. “Cost accounting is a system of foresight like pre-natal care, but financial accounting is just a postmortem examination”. Critically examine thisstatement (10 marks)

Answer:The project FORESIGHT stated objectives begin with the development of metrics applicable to the activity of forensic science laboratories. These metrics enable a laboratory to assess how they fit within the forensic science industry and offer a glance at the levels of performance that they might be able to achieve. FORESIGHT's mission goes on to state the intent for laboratories to use those measurements to “preserve what works, and change what does not”. The keys to the development of an ongoing strategic planning

Q6. Define costing. Discuss briefly the objectives and advantages of costing. (10 marks)

Answer:Costing is a System of computing cost of production or of running a business, by allocating expenditure to various stages of production or to different operations of a firm. A managerial accounting method that describes when all fixed and variable costs, including manufacturing costs, are used to compute the total cost per unit. Full costing includes these costs when computing the amount of money it takes to produce and distribute one unit of output.How a firm expenses its production and distribution costs will impact the

Q7. Define cost accounting and bring out the differences between cost accounts and Financialaccounts. (10 marks)

Answer:Cost accounting is the process of collecting information about the costs incurred by a company's activities, assigning selected costs to products and services and other cost objects, and evaluating the efficiency of cost usage. Cost accounting is mostly concerned with developing an understanding of where a company earns and loses money, and providing input into decisions to generate profits in the future.It is a type of

Q8. Define costing critically evaluate the arguments for the installation of costing system in an industry. (10 marks)

Answer:Costing is System of computing cost of production or of running a business, by allocating expenditure to various stages of production or to different operations of a firm.  Installation & Design of Costing System means in which each & every element of cost incurred at each stage of production through manpower, machine, material analysis & records will have to be kept in written. The process flow chart of each & every item produced in the company will have to be seen & accordingly records of each & every process of operation through man, machine & material will be kept. On that basis labor hour rate,

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