ACC 231 Cost Accounting 2022

Kingdom of Saudi Arabia
Jazan Community College

Jazan University, Jazan
Cost Accounting - ACC 231

Content
Part I (Exam – 1)
Unit 1: Introduction: Cost Accounting
Unit 2: Cost accounting – Nature, Scope & Objective
Unit 3: Cost accounting – Need and Uses
Unit 4: Cost concepts and classification
Unit 5: Cost Analysis for Decision Making
Part II (Exam – 2)
Unit 6: Preparation of Cost Sheet
Unit 7: Standard Costing and Variance Analysis
Unit 8: Cost Ledger Accounting
Unit 9: Cost-Volume-Profit Analysis
Unit 10: Process Costing
Part III (Exam – Final)
Unit 11: Accounting for Material: Material control Concept
Unit 12: Technique - FIFO (First in First Out)
Unit 13: Technique - LIFO (Last in First Out)
Unit 14: Technique - Weighted Average Method
Unit 15: Reconciliation of Cost and Financial Accounting

Unit 1: Introduction: Cost Accounting
Introduction
Cost accounting is a method of evaluating costs, profits and everything in between when it
comes to running a business. As an accountant specializing in cost accounting, he will be able
to use his accounting skills to alert key decision makers in his company of their options as they
make planning and budgeting decisions.
What Does Cost Accounting Mean?

Cost accounting will first measure and record these costs individually, then compare input
results to output or actual results to aid company management in measuring financial
performance. A type of accounting process that aims to capture a company's costs of
production by assessing the input costs of each step of production as well as fixed costs such
as depreciation of capital equipment.
********What is the main purpose of cost accounting?

Cost accounting is a means of weighing projected profits against projected costs by utilizing
the records of the past to predict the future. One will evaluate the cost of raw materials, labor
and indirect expenses. Then one will estimate predicted profits. After weighing the costs and
estimated profits, one will give advice to decision makers as to what changes need to be made
in order to keep the company profitable.
Origins
Cost accounting has long been used to help managers understand the costs of running a
business. Modern cost accounting originated during the industrial revolution, when the
complexities of running a large scale business led to the development of systems for recording
and tracking costs to help business owners and managers make decisions.
In the early industrial age, most of the costs incurred by a business were what modern
accountants call "variable costs" because they varied directly with the amount of production.
Money was spent on labor, raw materials, power to run a factory, etc. in direct proportion to
production. Managers could simply total the variable costs for a product and use this as a
rough guide for decision-making processes.
Exercise 1
Question: - Fill in the space from the following list:-
Managers, Measure and record, Evaluating, Weighing, Industrial revolution
 Cost accounting is a method of Evaluating costs, profits and everything in between

when it comes to running a business.
 Cost accounting will first Measure and record these costs individually, then compare
input results to output or actual results to aid company management in measuring
financial performance.
 Cost accounting is a means of Weighing projected profits against projected costs by

utilizing the records of the past to predict the future.
 Cost accounting has long been used to help Managers understand the costs of running
a business.
 Modern cost accounting originated during the Industrial revolution when the
complexities of running a large scale business led to the development of systems for
recording and tracking costs to help business owners and managers make decisions.
Question: - Put in the space (√) if it is true or put in the space (X) if it is false
 Cost accounting is not a method of evaluating costs, profits and everything in between
when it comes to running a business. X
 Cost accounting will first measure and record these costs individually, then compare
financial performance. (√)
 Cost accounting is a means of weighing projected profits against projected costs by

utilizing the records of the past to predict the future. (√)
 Cost accounting has not been used to help managers understand the costs of running a
business. X
 Modern cost accounting originated during the industrial revolution, when the
complexities of running a large scale business led to the development of systems for
recording and tracking costs to help business owners and managers make decisions.
(√)
Question: - Choose the correct answer from the following words:-
 Cost accounting is a method of ……………………costs, profits and everything in

between when it comes to running a business.
(a) Measure and record (b) Managers
(c) Weighing (d) Evaluating
 Cost accounting will first ………………………….these costs individually, then compare

financial performance.
 Cost accounting is a means of ……………………….projected profits against projected

costs by utilizing the records of the past to predict the future.
 Cost accounting has long been used to help …………………understand the costs of
running a business.

Unit 2: Cost accounting – Nature,
Scope & Objective
Nature QZ1
Cost accounting helps management in planning, control and decision-making. It is internal to
the organization and use common tool and techniques like standard costing, variable costing,
budgetary control etc.
Scope
The scope of cost accountancy is very wide and includes the following:-
Cost Ascertainment:- it deals with the collection and analysis of expenses, the measurement
of production of the different products at the different stages of manufacture and the linking up
of production with the expenses.
QZ1 Cost Accounting:- it is the process of accounting for cost which begins with recording of
expenditure and ends with the preparation of statistical data. It is formal mechanism by means
of which costs of product or services are ascertained and controlled.
Cost Control:- it is the guidance and regulation by executive action of the costs of operating
an understanding. The cost can be controlled by standard costing, budgetary control, proper
presentation and reporting of cost data and cost audit.
Objective
The following are the main objectives of cost accounting:-
 To ascertain the cost per unit of the different products manufactured by a business
concern;
 To provide a correct analysis of cost both process or operations and by different
elements of cost;
 To disclose source of wastage whether of material, time or expenses and to prepare
such reports which may be necessary to control such wastage.
 To provide requisite data and serve as a guide for fixing prices of products
manufactured or services rendered.
 To ascertain the profitability of each of the products and advise management as to how
these profits can be maximized.
Exercise
Cost Control, Cost Accounting, Cost Ascertainment, Management
 Cost accounting helps Management in planning, control and decision-making. It is

internal to the organization and use common tool and techniques like standard costing,
variable costing, budgetary control etc.
 Cost Ascertainment - it deals with the collection and analysis of expenses, the
measurement of production of the different products at the different stages of
manufacture and the linking up of production with the expenses.
 Cost Accounting - it is the process of accounting for cost which begins with recording
of expenditure and ends with the preparation of statistical data. It is formal mechanism
by means of which costs of product or services are ascertained and controlled.
 Cost Control - it is the guidance and regulation by executive action of the costs of
operating an understanding. The cost can be controlled by standard costing, budgetary
control, proper presentation and reporting of cost data and cost audit.
 Cost accounting helps management in planning, control and decision-making. It is

internal to the organization and use common tool and techniques like standard costing,
variable costing, budgetary control etc. (√)
 Cost Control: - it deals with the collection and analysis of expenses, the measurement
of production of the different products at the different stages of manufacture and the
linking up of production with the expenses. X
 Cost Accounting: - it is the process of accounting for cost which begins with recording of
expenditure and ends with the preparation of statistical data. It is formal mechanism by
means of which costs of product or services are ascertained and controlled. (√)
 Cost Ascertainment: - it is the guidance and regulation by executive action of the costs
of operating an understanding. The cost can be controlled by standard costing,
budgetary control, proper presentation and reporting of cost data and cost audit. X

.
 Cost accounting helps ……………………….. in planning, control and decision-making. It
is internal to the organization and use common tool and techniques like standard
costing, variable costing, budgetary control etc.
(a) Cost Control (b) Management
(c) Cost Ascertainment (d) Cost Accounting
 ………………………..: - it deals with the collection and analysis of expenses, the

measurement of production of the different products at the different stages of
manufacture and the linking up of production with the expenses.
 ………………………..: - it is the process of accounting for cost which begins with

recording of expenditure and ends with the preparation of statistical data. It is formal
mechanism by means of which costs of product or services are ascertained and
controlled.
 ………………………..: - it is the guidance and regulation by executive action of the

costs of operating an understanding. The cost can be controlled by standard costing,
budgetary control, proper presentation and reporting of cost data and cost audit.

Unit 3: Cost accounting – Need and
Uses
Need of Cost accounting
The following limitations of financial accounting have led to the development of cost
accounting:-
 No clear idea of operating efficiency.
 Weakness and spotted out by collection results.
 Not helpful in the price fixation.
 No classification of expenses and accounts:- In financial accounting there is no such
system by which accounts are classified so as to give data regarding costs by
departments, processes, products in the manufacturing divisions.
 No data for comparison and decision-making.
 No control on cost.
 No standards to assess the performance.
 Provides only historical information.
 No analysis of losses.
 Inadequate information for reports.
 No answer for certain questions:- Financial accounting will not help to answer such
questions as:-
 Should an attempt be made to sell more products or is the factory operating to
capacity?
 If an order or contract is accepted, is the prince obtainable sufficient to show a
profit?
 If the manufacture or sale of product A were discount and efforts made to increase
the sale of product B, what would be the net profit?
 Why the profit of the last year is of such a small amount despite the fact that output
was increased substantially?
 If a machine is purchased to carry out a job, at present done by hand, what effect
will this have on profits?
 Wage rates having been increased by SR 5 per hour, should selling price be
increased, and if so, by how much?
Uses of Cost accounting

The main uses of cost accounting are given below:-
 Profitable and unprofitable activities are disclosed.
 It enable a concern to measure the efficiency and then to maintain and improve it.
 It provides information upon which estimates and tenders are based.
 It guides future production policies.
 It helps in increase profits.
 It enables a periodical determination of profits or losses.
 It furnishes reliable data for comparing costs.
 The exact cause of decease or an increase in profit or loss.
 Cost accounting discloses the relative efficiencies of different workers.
 A sound business concern with a good system of costing can attract more investors
than a similar concern without an adequate system of costing.
 Helpful to the government.
 Helpful to customers.
 Efficiency of public enterprises.
Exercise
Efficiency, Guides, Disclosed, Information
 Profitable and unprofitable activities are Disclosed.

 It enable a concern to measure the Efficiency and then to maintain and improve it.
 It provides Information upon which estimates and tenders are based.
 It Guides future production policies.
 Profitable and unprofitable activities are hided. X

 It enable a concern to measure the efficiency and then to maintain and improve it.
(√)
 It provides information upon which estimates and tenders are based. (√)
 It guides past production policies. X

.
 Profitable and unprofitable activities are…………………..
(a) Efficiency (b) Disclosed
(c) Guides (d) Information

 It enable a concern to measure the ……………………..and then to maintain and
improve it.
 It provides ……………………upon which estimates and tenders are based.


 It ………………………. future production policies.

Unit 4: Cost concepts and
classification
Elements of cost
Mere knowledge of total cost cannot satisfy the needs of management. For proper control and
managerial decisions, management is to be provided with necessary data to analyse and
classify cost. Strictly speaking, the elements of cost are three i.e. Materials, Labour and
Other Expenses. These elements of cost are further analyses into different elements as
illustrated in the following chart:
Element of Cost
Materials Labour Other Expenses
Direct Indirect Direct Indirect Direct Indirect
Overheads
Production Administration Selling Distribution
By grouping the above element of cost, the following divisions of cost are obtained:
 Prime Cost = Direct Materials + Direct Labour + Direct Expenses

 Production (works) Cost = Prime Cost + Works or Factory
Overheads
 Cost of Production = Works Costs + Administration Overheads
 Total Cost or Cost of Sales = Cost of Production + Selling &

Distribution Overheads
 Selling Price = Total Cost or Cost of Sales + Profit.
Classification of costs
Classification of cost means, the grouping of costs according to their common
characteristics. The important ways of classification of costs are:-
 By Nature or elements or Analytical Classification.
 By functional (functional classification.
 By degree of traceability to the product (direct or indirect)
 By change in activity or volume:

 Fixed cost
 Variable Costs
 Semi-variable Costs
 By Controllability:-
 Controllable Cost
 Uncontrollable Costs
 By Normality:-
 Normal Cost
 Abnormal Cost
 By Time:-
 Historical Costs
 Predetermined Costs
 According to Planning and Control:-

 Budgeted Costs
 Standard Costs
 By Association with the product

 Product Costs
 Period Costs
 For Managerial Decisions:-

 Marginal Cost
 Out of pocket Costs
 Differential Costs
 Sunk Costs
 Opportunity Cost
 Replacement Cost
 Avoidable Costs
 Unavoidable Costs
 Explicit Costs
 Implicit Cost
Exercise
Control, Elements of cost, Management,

 Mere knowledge of total cost cannot satisfy the needs of Management
 For proper Control and managerial decisions, management is to be provided with

necessary data to analyze and classify cost.
 Strictly speaking, the Elements of cost are three i.e. Materials, Labour and Other
Expenses.
 Mere knowledge of total cost cannot satisfy the needs of management. T
 For proper control and managerial decisions, management is to be provided with
necessary data to analyze and classify cost. T
 Strictly speaking, the elements of cost are two i.e. Materials, Labour and Other
Expenses. F

 Mere knowledge of total cost cannot satisfy the needs of……………………….
(a) Elements of cost (b) Control
(c) Management (d) Non of Above
 For proper ………………….and managerial decisions, management is to be provided

with necessary data to analyze and classify cost.
(c) Management (d) None of Above
 Strictly speaking, the …………………are three i.e. Materials, Labour and Other
Expenses.
(c) Management (d) Non of Above

Unit 5: Cost Analysis for Decision
Making
Cost Analysis in Decision Making
Cost Analysis Is helpful in solving two types of problems, i.e. those that involve capital outlay
investment and those which do not.
 Determination of the most profitable level of production and price
 Accept or Reject Decisions.
 Make or Buy Decisions
 Sell or Process Decisions
 Level of Activity Planning
 Purchasing or Leasing
Determination of the most profitable level of production and price: - When it is required to
determine the most profitable level of production which gives the maximum profit, the selling
prices expected to absorb at various levels of activity are assessed by means of market
research. Similarly differential cost is calculated and is matched against the differential
revenue in order to determine the best price and optimum level of production.
Accept or Reject Decisions:- While deciding about rejection or acceptance the following
factors should be taken into consideration:
 The impact on future earning of temporary reduction in the selling price.
 The effect of reducing selling prices on the exiting customers when it comes to their
knowledge.
 The possibility of selling additional units to the new customers beyond the offer.
 The reliability of cost estimates associated with the offer.
 The effect on current and future capacity in terms of an expansi on of plant, personal,
financial requirements and other capacity constraints.
Make or Buy Decisions:- The factors influence the make or buy decision are as follows:-
 Quality of goods supplied by the supplier.
 Uninterrupted supply by the supplier meeting the delivery dates.
 Any adverse effect on Labour relations if it is decided to buy from outside instead of
making.
 The facility of wider selection in case of buy-decision.
Sell or Process Decisions:- A product can be sold by a company when it has been partially
processed or of processing it further and then selling it. When a product passes through a
series of manufacturing operations.
Level of Activity Planning:- Marginal costing and differential cost analysis may be of great
help to the management in planning the level of activity. Maximum contribution at a particular
level of activity will show the position of maximum profitability.
Purchasing or Leasing:- Sometimes, the management is required to take decision whether a

particular asset say building is to be purchased or may be taken on lease basis. In this case
the total cost of the two alternatives is to be compared in order to calculate the annual saving
or extra cost involved if the building is purchased as compared to leasing.
Exercise
Purchasing or Leasing, Sell or Process Decisions, Level of Activity Planning
 Sell or Process Decisions - A product can be sold by a company when it has been
partially processed or of processing it further and then selling it. When a product passes
through a series of manufacturing operations.
 Level of Activity Planning - Marginal costing and differential cost analysis may be of great
help to the management in planning the level of activity. Maximum contribution at a
particular level of activity will show the position of maximum profitability.
 Purchasing or Leasing - Sometimes, the management is required to take decision

whether a particular asset say building is to be purchased or may be taken on lease basis.
In this case the total cost of the two alternatives is to be compared in order to calculate the
annual saving or extra cost involved if the building is purchased as compared to leasing.
 Purchasing or Leasing: - A product can be sold by a company when it has been partially
series of manufacturing operations. FALSE
 Level of Activity Planning: - Marginal costing and differential cost analysis may be of
great help to the management in planning the level of activity. Maximum contribution at a
particular level of activity will show the position of maximum profitability. TRUE
 Sell or Process Decisions: - Sometimes, the management is required to take decision

FALSE

 …………………………….: - A product can be sold by a company when it has been partially
series of manufacturing operations.
(a) Sell or Process Decisions (b) Purchasing or Leasing
(c) Level of Activity Planning (d) None of Above
 …………………………….: - Marginal costing and differential cost analysis may be of great

help to the management in planning the level of activity. Maximum contribution at a
particular level of activity will show the position of maximum profitability.
 …………………………….: - Sometimes, the management is required to take decision


Unit 6: Preparation of Cost Sheet
Cost Sheet or Statement of Cost
Cost sheet is a statement designed to show the output of a particular accounting period along-
with break-up of costs. The data incorporated in cost sheet are collected from various
statements of accounts which have written in cost accounts, either day-to-day or regular
records.
The main advantages of a cost sheet are:

 It discloses the total cost and the cost per unit of the units produced during the given
period.
 It enables a manufacturer to keep a close watch and control over the cost of production.
 It acts as a guide to the manufacturer and helps him in formulating a definite useful
production policy.
 It helps in fixing up the selling price more accurately.
 It helps the businessman to minimize the cost of production when there is a cut throat
competition.
Format of cost sheet is as under:-
Statement of Cost Sheet and Profit

Total Cost (SR) Cost Per Unit (SR)
Direct Material
Direct Labour
Direct Other Expenses
********Prime Cost - -
Add: Works Overheads
Works Cost - -
Add: Administration Overheads
Cost of Production - -
Add: Selling and Distribution Overheads
Total Cost or Cost of Sales - -
Add: Profit
Selling Price - -
Example:- Calculate Prime Cost, Works Cost, Cost of Production, Cost of Sales, and Profit
from the following particulars:
Direct Materials 100000 Depreciation

Direct Wages 30000 Factory 500
Wages of foreman 2500 Office 1250
Electric Power 500 Consumables Stores 2500
Lighting: Manager's Salary 5000
Factory 1500 Director's Fees 1250
Office 500 Office Stationery 500
Storekeeper's Wages 1000 Telephone Charges 125
Oil and Water 500 Postage and Telegrams 250
Rent: Salesmen's Salaries 1250
Factory 5000 Travelling Expenses 500
Office 2500 Advertising 1250
Repairs and Renewals: Warehouse Charges 500
Factory Plant 3500 Sales 189500
Office Premises 500 Carriage Outward 375
Solution:-
Direct Material 100000

Direct Labour 30000
Prime Cost 130000
Add: Works Overheads
Wages of foreman 2500
Electric Power 500
Storekeeper's Wages 1000
Oil and Water 500
Lighting:
Factory 1500
Rent:
Factory 5000
Repairs and Renewals:
Factory Plant 3500
Consumables Stores 2500
Depreciation
Factory 500 17500
Works Cost 147500
Add: Administration Overheads
Lighting:
Office 500
Rent:
Office 2500
Repairs and Renewals:
Office Premises 500
Depreciation
Office 1250
Manager's Salary 5000
Director's Fees 1250
Office Stationery 500
Telephone Charges 125
Postage and Telegrams 250 11875
Cost of Production 159375
Add: Selling and Distribution
Overheads
Salesmen's Salaries 1250
Travelling Expenses 500
Advertising 1250
Warehouse Charges 500
Carriage Outward 375 3875
Total Cost or Cost of Sales 163250
Sales 189500
Profit 26250
Exercise
Question:-Calculate Prime Cost, Works Cost, Cost of Production, Cost of Sales, and Profit
from the following particulars:
Direct Materials 100000 Depreciation

Direct Wages 30000 Factory 500
Wages of foreman 2500 Office 1250
Electric Power 500 Consumables Stores 2500
Lighting: Manager's Salary 5000
Factory 1500 Director's Fees 1250
Office 500 Office Stationery 500
Storekeeper's Wages 1000 Telephone Charges 125
Oil and Water 500 Postage and Telegrams 250
Rent: Salesmen's Salaries 1250
Factory 5000 Travelling Expenses 500
Office 2500 Advertising 1250
Repairs and Renewals: Warehouse Charges 500
Factory Plant 3500 Sales 189500
Office Premises 500 Carriage Outward 375
Unit 7: Standard Costing and Variance
Analysis (73 G -11-09-22)
Standard cost accounting
In modern cost accounting, the concept of recording historical costs was taken further, by
allocating the company's fixed costs over a given period of time to the items produced during
that period, and recording the result as the total cost of production.
This allowed the full cost of products that were not sold in the period they were produced to be
recorded in inventory using a variety of complex accounting methods. It also essentially
enabled managers to ignore the fixed costs, and look at the results of each period in relation to
the "standard cost" for any given product.
For example: if the railway coach company normally produced 40 coaches per month, and the
fixed costs were still $1000/month, then each coach could be said to incur an overhead of $25
($1000 / 40). Adding this to the variable costs of $300 per coach produced a full cost of $325
per coach.
This method tended to slightly distort the resulting unit cost, but in mass-production industries
that made one product line, and where the fixed costs were relatively low, the distortion was
very minor.
For example: if the railway coach company made 100 coaches one month, then the unit cost
would become $310 per coach ($300 + ($1000 / 100)). If the next month the company made
50 coaches, then the unit cost = $320 per coach ($300 + ($1000 / 50)), a relatively minor
difference.
An important part of standard cost accounting is a variance analysis which breaks down the
variation between actual cost and standard costs into various components (volume variation,
material cost variation, labor cost variation, etc.) so managers can understand why costs were
different from what was planned and take appropriate action to correct the situation.
Variance (accounting)
In budgeting (or management accounting in general), a variance is the difference between a
budgeted, planned or standard amount and the actual amount incurred/sold. Variances can be
computed for both costs and revenues.
The concept of variance is intrinsically connected with planned and actual results and effects
of the difference between those two on the performance of the entity or company.
Variance Analysis
Variance analysis, in budgeting (or management accounting in general), is a tool of budgetary
control by evaluation of performance by means of variances between budgeted amount,
planned amount or standard amount and the actual amount incurred/sold. Variance analysis
can be carried out for both costs and revenues.
Types of variances
Variances can be divided according to their effect or nature of the underlying amounts. When
effect of variance is concerned, there are two types of variances:
 When actual results are better than expected results given variance is described as
favourable variance. In common use favourable variance is denoted by the letter F -
usually in parentheses (F).
 When actual results are worse than expected results given variance is described as
adverse variance, or unfavourable variance. In common use adverse variance is
denoted by the letter A or the letter U - usually in parentheses (A).
 The second typology (according to the nature of the underlying amount) is determined
by the needs of users of the variance information and may include e.g.:
 Variable cost variances
 Direct Material Variances
 Direct Labour Variances
 Variable production overhead variances
 Fixed production overhead variances
 Sales Variances
Exercise
Performance, Mass-production, Budgeting, Variance, Historical
 In modern cost accounting, the concept of recording Historical costs was taken
further, by allocating the company's fixed costs over a given period of time to the
items produced during that period, and recording the result as the total cost of
production.
 This method tended to slightly distort the resulting unit cost, but in Mass-production
industries that made one product line, and where the fixed costs were relatively low, the
distortion was very minor.
 In Budgeting (or management accounting in general), a variance is the difference between
a budgeted, planned or standard amount and the actual amount incurred/sold.
 Variance analysis, in budgeting (or management accounting in general), is a tool of
budgetary control by evaluation of Performance by means of variances between budgeted
amount, planned amount or standard amount and the actual amount incurred/sold.
 When actual results are worse than expected results given Variance is described as
adverse variance, or unfavourable variance.
 In historical cost accounting, the concept of recording historical costs was taken further, by
allocating the company's fixed costs over a given period of time to the items produced
during that period, and recording the result as the total cost of production. F
 This method tended to slightly distort the resulting unit cost, but in mass-production
distortion was very minor. T
 In Variance analysis (or management accounting in general), a variance is the difference
between a budgeted, planned or standard amount and the actual amount incurred/sold.
Variances can be computed for both costs and revenues. F
 Variance analysis, in budgeting (or management accounting in general), is a tool of
budgetary control by evaluation of performance by means of variances between budgeted
Variance analysis can be carried out for both costs and revenues. T
 When actual results are worse than expected results given variance is described as
adverse variance, or unfavourable variance. T

 In modern cost accounting, the concept of recording ……………………costs was taken
further, by allocating the company's fixed costs over a given period of time to the items
produced during that period, and recording the result as the total cost of production.
(a) Variance (b) Historical
(c) Budgeting (d) Mass-production
 This method tended to slightly distort the resulting unit cost, but in …………………….
distortion was very minor.
 In …………………… (or management accounting in general), a variance is the difference

between a budgeted, planned or standard amount and the actual amount incurred/sold.
Variances can be computed for both costs and revenues.
 ……………….. analysis, in budgeting (or management accounting in general), is a tool of

budgetary control by evaluation of performance by means of variances between budgeted
Variance analysis can be carried out for both costs and revenues.

Unit 8: Cost Ledger Accounting
Introduction
The accounting system to be employed in a particular concern depends upon the requirements
of the business and the information required. Basically there are two systems of accounting to
keep cost books i.e.:-
 Non-integral or cost ledger accounting
 Integral or integrated accounting
Where cost and financial transaction are kept separate, the system is called non-integral or
ledger accounting and where cost and financial transaction are integrated, the system is called
Integral or integrated accounting.
Cost Ledgers
The most important cost ledgers are as follows:
 Cost Ledger: - this is the principal ledger. It contains all impersonal accounts. It is
made self-balancing by maintaining therein a control account for each of the other
ledgers.
 Stores Ledger:- this contains accounts all the stores accounts. A separate account is
opened for each item of stores.
 Work-in-progress: - this contains accounts of various jobs. Each job, unit or process is
given a job number and a separate account is opened for each job.
 Finished Goods ledger:- this contains accounts of all types of finished goods. A
separate account is account is opened each type of finished goods.
Control Accounts
At any time, the total in control account and aggregate of individual balances in subsidiary
ledger accounts should agree. Such control accounts:
 Facilitate compilation of final accounts and reconciliation with financial accounts;
 Give a summary of thousand of individual accounts; and
 Furnish the total position i.e. to know the value of pending jobs or of materials in hand,
one need not individual balances.
The following are the important accounts in the cost ledger:-

 General ledger adjustment Account
 Stores ledger control account
 Wages control account
 Production overhead account
 Work-in-progress
 Administration overhead account
 Finished Goods ledger
 Selling and distribution overhead account
 Cost of sales account
 Costing profit & loss account
Advantage of Cost Ledgers
The following are the advantage of maintaining a cost ledger:
 It helps the management in policy decisions.
 It provides the basis for analysis of cost and preparation of cost accounts.
 It provides the control over materials and supplies labour and overhead.
 It serves as check on the transactions and records in financial accounts
 Maintenance of cost ledgers serves to provide elaborate information for planning,
control, evaluation of performance and decision-making by facilitating generation of
internal reports.
Exercise
Cost Ledger, Work-in-progress, Finished Goods ledger, Stores Ledger
 Cost Ledger - this is the principal ledger. It contains all impersonal accounts. It is made
self-balancing by maintaining therein a control account for each of the other ledgers.
 Stores Ledger - this contains accounts all the stores accounts. A separate account is
opened for each item of stores.
 Work-in-progress - this contains accounts of various jobs. Each job, unit or process is
given a job number and a separate account is opened for each job.
 Finished Goods ledger - this contains accounts of all types of finished goods. A
 Cost Ledger: - this is the principal ledger. It contains all impersonal accounts. It is
made self-balancing by maintaining therein a control account for each of the other
ledgers. T
 Work-in-progress:- this contains accounts all the stores accounts. A separate account
is opened for each item of stores. F
 Stores Ledger: - this contains accounts of various jobs. Each job, unit or process is
given a job number and a separate account is opened for each job. F
 Finished Goods ledger:- this contains accounts of all types of finished goods. A
separate account is account is opened each type of finished goods. T

 ……………………………: - this is the principal ledger. It contains all impersonal
accounts. It is made self-balancing by maintaining therein a control account for each of
the other ledgers.
(a) Cost Ledger (b) Work-in-progress
(c) Finished Goods ledger (d) Stores Ledger

 ……………………………:- this contains accounts all the stores accounts. A separate
account is opened for each item of stores.
 ……………………………: - this contains accounts of various jobs. Each job, unit or

process is given a job number and a separate account is opened for each job.
 ……………………………:- this contains accounts of all types of finished goods. A


Unit 9: Cost-Volume-Profit Analysis
Introduction
An analysis deals with how profits and costs change with a change in volume. More
specifically, it looks at the effects on profits of changes in such factors as variable costs, fixed
costs, selling prices, volume, and mix of products sold. By studying the relationships of costs,
sales, and net income, management is better able to cope with many planning decisions. For
example, CVP analysis attempts to answer the following questions:
 What sales volume is required to break even?
 What sales volume is necessary in order to earn a desired (target) profit?
 What profit can be expected on a given sales volume?
 How would changes in selling price, variable costs, fixed costs, and output affect
profits?
 How would a change in the mix of products sold affect the break-even and target
volume and profit potential?
Cost-Volume-Profit Analysis or Breakeven

Cost–volume–profit (CVP) analysis is defined in CIMA’s Terminology as the ‘study of the
effects on future profit of changes in fixed cost, variable cost, sales price, quantity and mix’.
A common term used for this type of analysis is breakeven analysis.
However, this is somewhat misleading, since it implies that the focus of the analysis is the
breakeven point – that is, the level of activity which produces neither profit nor loss. The terms
‘breakeven analysis’ and ‘CVP analysis’ tend to be used interchangeably.
The concept of contribution

As we know variable costs are those that vary with the level of activity. If we can identify the
variable costs associated with producing and selling a product or service we can highlight a
very important measure: contribution.
Contribution = sales value - variable costs
Variable costs are sometimes referred to as marginal costs and the two terms are often used
interchangeably.
Contribution is so called because it literally does contribute towards fixed costs and profit.
Once the contribution from a product or service has been calculated, the fixed costs
associated with the product or service can be deducted to determine the profit for the period.
Calculating the breakeven point

As sales revenues grow from zero, the contribution also grows until it just covers the fixed
costs. This is the breakeven point where neither profits nor losses are made. It follows that to
break even the amount of contribution must exactly match the amount of fixed costs. If we
know how much contribution is earned from each unit sold, then we can calculate the number
of units required to break even as follows:
Breakeven point in units = Fixed costs / Contribution per unit
For example, suppose that an organization manufactures a single product, incurring variable
costs of SR30 per unit and fixed costs of SR20000 per month. If the product sells for SR50 per
unit, then the breakeven point can be calculated as follows:
Breakeven point in units = SR20000 / SR50 - SR30 = 1000 units per month
The margin of safety

The margin of safety is the difference between the expected level of sales and the breakeven
point. The larger the margin of safety, the more likely it is that a profit will be made, that is, if
sales start to fall there is more leeway before the organization begins to incur losses.
(Obviously, this statement is made on the assumption that projected sales volumes are above
the breakeven point.)
In the above example, if forecast sales are 1,700 units per month, the margin of safety can be
easily calculated.
Margin of safety = projected sales - breakeven point
= 1,700 units - 1,000 units
=700 units per month, or 41% of sales (700/1,700 *100%)
The margin of safety should be expressed as a percentage of projected sales to put it in

perspective. To quote a margin of safety of 700 units without relating it to the projected sales
figure is not giving the full picture.
The margin of safety can also be used as one route to a profit calculation. We have seen that
the contribution goes towards fixed costs and profit. Once breakeven point is reached the fixed
costs have been covered. After the breakeven point there are no more fixed costs to be
covered and all of the contribution goes towards making profits grow.
In our example the monthly profit from sales of 1,700 units would be SR14,000.
Margin of safety = 700 units per month
Monthly profit = 700 * contribution per unit
= 700 * SR20
= SR14000.
Exercise
Analysis, Breakeven point, Contribution, Interchangeably, Profit,
 The ‘study of the effects on future Profit of changes in fixed cost, variable cost, sales price,
quantity and mix’
 This is the breakeven point where neither profits nor losses are made.
 The terms ‘breakeven analysis’ and ‘CVP analysis’ tend to be used Interchangeably
 A common term used for this type of Analysis is breakeven analysis.
 As sales revenues grow from zero, the Contribution also grows until it just covers the
fixed costs.
 the ‘study of the effects on future profit of changes in fixed cost, variable cost, sales price,
quantity and mix’ T
 The terms ‘breakeven analysis’ and ‘CVP analysis’ tend to be used differently. F
 A common term used for this type of analysis is breakeven analysis. T
 This is the breakeven point where profits is made. F
 As sales revenues grow from zero, the contribution also grows until it just covers the fixed
costs. T
 The ‘study of the effects on future …………………………of changes in fixed cost, variable
cost, sales price, quantity and mix’.
(a) Analysis (b) Breakeven point
(c) Contribution (d) Profit
 This is the ……………………………….where neither profits nor losses are made.

(c) Contribution (d) Interchangeably
 The terms ‘breakeven analysis’ and ‘CVP analysis’ tend to be used ………………………….
 A common term used for this type of ……………………………….is breakeven analysis.

 As sales revenues grow from zero, the ……………………………also grows until it just
covers the fixed costs.

Unit 10: Process Costing
What is process costing?
Process costing is an accounting methodology that traces and accumulates direct costs, and
allocates indirect costs of a manufacturing process. Costs are assigned to products, usually in
a large batch, which might include an entire month's production. Eventually, costs have to be
allocated to individual units of product. It assigns average costs to each unit, and is the
opposite extreme of job costing which attempts to measure individual costs of production of
each unit.
Process costing is a type of operation costing which is used to ascertain the cost of a product
at each process or stage of manufacture.
Definition of process costing

"The costing method applicable where goods or services result from a sequence of continuous
or repetitive operations or processes. Costs are averaged over the units produced during the
period".
Process costing is suitable for industries producing homogeneous products and where
production is a continuous flow. A process can be referred to as the sub-unit of an organization
specifically defined for cost collection purpose.
Reasons for use

Companies need to allocate total product costs to units of product for the following reasons:
 A company may manufacture thousands or millions of units of product in a given period
of time.
 Products are manufactured in large quantities, but products may be sold in small
quantities, sometimes one at a time (automobiles, loaves of bread), a dozen or two at a
time (eggs, cookies), etc.
 Product costs must be transferred from Finished Goods to Cost of Goods Sold as sales
are made. This requires a correct and accurate accounting of product costs per unit, to
have a proper matching of product costs against related sales revenue. *Managers
need to maintain cost control over the manufacturing process. Process costing provides
managers with feedback that can be used to compare similar product costs from one
month to the next, keeping costs in line with projected manufacturing budgets.
 A fraction-of-a-cent cost change can represent a large dollar change in overall
profitability, when selling millions of units of product a month. Managers must carefully
watch per unit costs on a daily basis through the production process, while at the same
time dealing with materials and output in huge quantities.
 Materials part way through a process (e.g. chemicals) might need to be given a value,
process costing allows for this. By determining what cost the part processed material
has incurred such as labor or overhead an "equivalent unit" relative to the value of a
finished process can be calculated.
Exercise
Costing, Homogeneous, Process, Manufacturing,
 Process costing is an accounting methodology that traces and accumulates direct costs,
and allocates indirect costs of a Manufacturing process.
 Process costing is a type of operation costing which is used to ascertain the cost of a
product at each process or stage of manufacture
 The Costing method applicable where goods or services result from a sequence of
continuous or repetitive operations or processes.
 Process costing is suitable for industries producing Homogeneous products and where
production is a continuous flow.
Question: - Put in the space (√) if it is true or put in the space (X) if it is false.
and allocates indirect costs of a manufacturing process. T
 Process costing is a type of operation costing which is used to ascertain the cost of a
product at each process or stage of manufacture T
 The costing method applicable where goods or services result from a sequence of
continuous or repetitive operations or processes. Costs are averaged over the units
produced during the period T
 Process costing is suitable for industries producing homogeneous products and where
production is a continuous flow. T
and allocates indirect costs of a ………………………process.
(a) Costing (b) Homogeneous
(c) Process (d) Manufacturing
 ……………………costing is a type of operation costing which is used to ascertain the cost

of a product at each process or stage of manufacture.
 The ……………….method applicable where goods or services result from a sequence of

continuous or repetitive operations or processes.
 Process costing is suitable for industries producing ………………………products and

where production is a continuous flow.

Unit 11: Accounting for Material:
Material control Concept
Material flow accounting
Material is the first and most important element of cost. In most of the manufacturing
organization, materials form the single largest component of cost. The term material simply
means any commodity or substance which is processed in a factory in order to be converted
into finished product. Materials may be classified as follows:
 Raw material
 Tools
 Spare Parts
 Consumable Stores
First in First out (FIFO)

Under this method material is `first issued from the earliest consignment on hand and priced at
the cost at which that consignment was placed in the stores. In other words, materials received
first are issued first. The units in the opening stock of materials are treated as if they are issued
first, the units from the first purchase issued next and so on until the units left in the closing
stock of materials are valued at the latest cost of purchases. It follows that unit costs are
apportioned to cost of production according to their chronological order of receipts in the store.
This method is most suitable in times of falling prices because the issue price of materials to
jobs or works orders will be high (material issued from the earliest consignments which were
purchased at a higher rate) while the cost of replacement of materials will be low.
But in case of rising prices this method is not suitable because the issue price of materials to
production will be low while the cost of replacement of materials will be high.
Last in First Out (LIFO)

As against First in First out method the issues under this method are priced in the reverse
order of purchase i.e. the price of the latest available consignment is taken. This method is
sometimes known as the replacement cost because materials are issued at the current cost to
jobs work orders except when purchases were made long ago.
This method is suitable in times of rising prices because material will be issued from the latest
consignment at a price which is closely related to the current price levels. Valuing material
issues at the price of the latest available consignment will help the management in fixing the
competitive selling prices of the products.
Weighted Average Method
A price which is calculated by dividing the total cost of material of material in the stock from
which materials to be priced could be drawn by the total quantity of materials in the stock.
The weighted average price takes into account the price and quantity of the materials in store.
For example, the weighted average price is SR 11.33 per unit calculated as follows:-
1000 x SR 10 + 2000 x SR 11 + 3000 x SR 12

1000 + 2000 + 3000
= SR 11.33
It is better to issue the material at weighted average price method because it recovers
the cost price of the materials in the stock is SR 68000 and charge to jobs or work
orders is also SR 68000 (i.e. 6000 units @ SR 11.33)
In the period of heavy fluctuations in the prices of materials, the average cost method
gives better results because it tends to smooth out fluctuations in prices by taking the
average of prices of various lots in stock.
Exercise
First in First out (FIFO), Element of cost, Last in First out (LIFO), Weighted Average Method
 Material is the first and most important Element of cost In most of the manufacturing
organization, materials form the single largest component of cost.
 First in First out (FIFO) material is `first issued from the earliest consignment on hand and
priced at the cost at which that consignment was placed in the stores. In other words,
materials received first are issued first.
 Last in First out (LIFO) method the issues under this method are priced in the reverse
order of purchase i.e. the price of the latest available consignment is taken.
 Weighted Average Method A price which is calculated by dividing the total cost of material
of material in the stock from which materials to be priced could be drawn by the total
quantity of materials in the stock.
Question: - Put in the space (√) if it is true or put in the space (X) if it is false.
 Material flow accounting: - Material is the first and most important element of cost. In
most of the manufacturing organization, materials form the single largest component of
cost. T
 First in First out (FIFO):- Under this method material is `first issued from the earliest
consignment on hand and priced at the cost at which that consignment was placed in the
stores. In other words, materials received first are issued first. T
 Last in First out (LIFO):-As against First in First out method the issues under this method
are priced in the reverse order of purchase i.e. the price of the latest available consignment
is taken. T
 Weighted Average Method A price which is calculated by dividing the total cost of material
quantity of materials in the stock. T
 Material is the first and most important………………….. In most of the manufacturing

organization, materials form the single largest component of cost.
(a) First in First out (FIFO) (b) Element of cost
(c) Last in First out (LIFO) (d) Weighted Average Method
 ……………………….material is `first issued from the earliest consignment on hand and

priced at the cost at which that consignment was placed in the stores. In other words,
materials received first are issued first.
 ………………………….method the issues under this method are priced in the reverse order
of purchase i.e. the price of the latest available consignment is taken.
 ………………………………..A price which is calculated by dividing the total cost of material

quantity of materials in the stock.

Unit 12: Technique - FIFO (First in First
Out)
Question: -
The “received” side of the Store Ledger Account shows the following particulars:
Jan 1 Opening Balance: 500 units @ SR 4

Jan 5 Received from vendor: 200 units @ SR 4.25
Jan 25 Received from vendor: 400 units @ SR 4
Issues of material were as follows:
Jan 4 200 units

Jan 10 400 units
Jan 15 100 units
Jan 19 100 units
Jan 26 200 units
Jan 30 400 units
Stores Ledger Account
Date Particulars Receipts Issues Balance

Total Unit Total Unit Per
Quantity cost cost Quantity cost cost Quantity Amount Unit
(Units) SR SR (Units) SR SR (Units) SR SR
1-Jan Balance 500 2000 4
4-Jan Issue 200 800 4 300 1200 4
Goods
5-Jan Received 200 850 4.25 300 1200 4
200 850 4.25
10-Jan issue 300 1200 4
100 425 4.25 100 425 4.25
Goods
12-Jan Received 150 615 4.1 100 425 4.25
150 615 4.1
15-Jan issue 100 425 4.25 150 615 4.1
19-Jan issue 100 410 4.1 50 205 4.1
Goods
20-Jan Received 300 1350 4.5 50 205 4.1
300 1350 4.5
25-Jan Goods 400 1600 4 50 205 4.1
Received
300 1350 4.5
400 1600 4
26-Jan issue 50 205 4.1 150 675 4.5
150 675 4.5 400 1600 4
30-Jan issue 150 675 4.5 300 1200 4

100 400 4
Exercise
Question: -

Jan 4 200 units

Jan 10 400 units
Jan 15 100 units
Jan 19 100 units
Jan 26 200 units
Jan 30 400 units
Unit 13: Technique - LIFO (Last in First
Out)
Question: -

Jan 4 200 units

Jan 10 400 units
Jan 15 100 units
Jan 19 100 units
Jan 26 200 units
Jan 30 400 units

Date Particulars Receipts Issues Balance
Total Unit Total Unit Per
Quantity cost cost Quantity cost cost Quantity Amount Unit
(Units) SR SR (Units) SR SR (Units) SR SR
1-Jan Balance 500 2000 4
4-Jan Issue 200 800 4 300 1200 4
Goods
5-Jan Received 200 850 4.25 300 1200 4
200 850 4.25
10-Jan issue 200 850 4.25
200 800 4 100 400 4
Goods
12-Jan Received 150 615 4.1 100 400 4
150 615 4.1
15-Jan issue 100 410 4.1 100 400 4
50 205 4.1
19-Jan issue 50 205 4.1 50 205 4.1
50 200 4 50 200 4
Goods
20-Jan Received 300 1350 4.5 50 200 4
300 1350 4.5
Goods
25-Jan Received 400 1600 4 50 200 4
300 1350 4.5
400 1600 4
26-Jan issue 200 800 4 50 200 4
300 1350 4.5
200 800 4
30-Jan issue 200 800 4 50 200 4
200 1000 4.5 100 450 4.5
Exercise
Question: -

Jan 4 200 units

Jan 10 400 units
Jan 15 100 units
Jan 19 100 units
Jan 26 200 units
Jan 30 400 units
Unit 14: Technique - Weighted Average
Method
Question: -
The following transaction took place in respect of an item of material:
Receipt Issue
Dated Quantity Rate Quantity
2-Nov 200 2
10-
Nov 300 2.4
15-
Nov 250
18-
Nov 250 2.6
20-
Nov 200
Receipts Issues Balance

Cost Cost
Total per Total per
Date Particulars Quantity Cost Unit Quantity Cost Unit Quantity Amount
Goods
2-Nov Received 200 400.00 2.00 200 400
Goods
10-Nov Received 300 720.00 2.40 500 1120
15-Nov Issued 250 560.00 2.24 250 560

Goods
18-Nov Received 250 650.00 2.60 500 1210
20-Nov Issued 200 484.00 2.42 300 726

Exercise
Question: -
The following transaction took place in respect of an item of material:
Receipt Issue
Dated Quantity Rate Quantity
2-Nov 200 2
10-
Nov 300 2.4
15-
Nov 250
18-
Nov 250 2.6
20-
Nov 200
Unit 15: Reconciliation of Cost and
Financial Accounting
Need for reconciliation
In those concerns where there are no separate cost financial accounts, the problem of
reconciliation does not arise. But where cost and financial accounts are maintained
independent of each other, it is imperative that periodically two accounts are reconciled.
Though both sets of books are concerned with the same basic transactions but figure of profit
disclosed by the former does not agree with that disclosed by the latter. Thus, reconciliation
between the results of the two sets of books is necessary due to the following reasons:-
 To find out the reasons for the difference in the profit and loss in cost and financial
accounts and indicate the position clearly and to be sure that no mistakes pertaining to
accounts have been committed.
 To ensure the mathematical accuracy and reliability of cost accounts in order to have
cost ascertainment, cost control and have a check on the financial accounts.
 To contribute to the standardization of policies regarding stock valuation, depreciation
and overheads.
 To facilitate coordination and promote better cooperation between the activities of
financial and cost sections of the accounting department.
 To place management in better position to acquaint itself with the reasons for the
variation in profits paving the way to more effective internal control
Reasons for disagreement in profit

The disagreement between the costing and financial profit is caused by the following:
 Items shown only in financial accounts

 Purely financial charges
 Appropriations of profit
 Writing off intangible and fictitious assets
 Purely financial incomes
 Items shown only in cost accounts
 Over or under-absorption of overheads
 Different bases of stock valuation
 Different methods of charging depreciation
 Abnormal gains and losses
Method of Reconciliation
The reconciliation of costing and financial profits can be attempted either:
 By preparing Reconciliation Statement or

 By Preparation Memorandum Reconciliation Account.
Reconciliation Statement
When reconciliation is attempted by preparing a reconciliation statement, profit shown by one
set of accounts is taken as base profit and items of difference are either added to it or
deducted from to arrive at the figure of profit shown by other set of accounts.
Memorandum Reconciliation Account

Reconciliation can also be done by preparing a Memorandum Reconciliation Account. This
account is a memorandum account only and form part of double entry. When reconciliation is
attempted through Memorandum Reconciliation Account, profit to be taken as ‘base profit’ is
shown like opening balance of this account. All items of differences required to be deducted
are debited and those to be added are credited to this account, the balancing figure of this
account is the profit shown by other set of accounts.
Exercise
Basic, Reconciliation, Cost and financial, Mathematical
 But where Cost and financial accounts are maintained independent of each
other, it is imperative that periodically two accounts are reconciled.
 Though both sets of books are concerned with the same Basic transactions but
figure of profit disclosed by the former does not agree with that disclosed by the
latter.
 To ensure the Mathematical accuracy and reliability of cost accounts in order to
have cost ascertainment, cost control and have a check on the financial
accounts.
 When Reconciliation is attempted by preparing a reconciliation statement, profit
shown by one set of accounts is taken as base profit and items of difference are
either added to it or deducted from to arrive at the figure of profit shown by other
set of accounts.
 But where cost and financial accounts are maintained independent of each other,
it is imperative that periodically two accounts are reconciled. TRUE
 Though one set of books are concerned with the same basic transactions but
figure of profit disclosed by the former does not agree with that disclosed by the
latter. FALSE
 To ensure the mathematical accuracy and reliability of cost accounts in order to
have cost ascertainment, cost control and have a check on the financial
accounts. TRUE
 When reconciliation is attempted by preparing a reconciliation statement, profit
shown by one set of accounts is taken as base profit and items of difference are
either added to it or deducted from to arrive at the figure of profit shown by other
set of accounts. TRUE
 But where ………………………..accounts are maintained independent of each

other, it is imperative that periodically two accounts are reconciled.
(a) Basic (b) Reconciliation
(c) Cost and financial (d) Mathematical
 Though both sets of books are concerned with the same ……………transactions
but figure of profit disclosed by the former does not agree with that disclosed by
the latter.
 To ensure the ………………………accuracy and reliability of cost accounts in

order to have cost ascertainment, cost control and have a check on the financial
accounts.
 When ……………………is attempted by preparing a reconciliation statement,

profit shown by one set of accounts is taken as base profit and items of
difference are either added to it or deducted from to arrive at the figure of profit
shown by other set of accounts.

Glossary (‫)قاموس مصطلحات‬
Absences ‫الغياب‬
Academic ‫أكاديمي‬
Access ‫وصول‬
Accountability ‫المساءلة‬
Accounts Receivable ‫حسابات القبض‬
Accrual basis ‫أساس االستحقاق‬
Actions ‫اإلجراءات‬
Administers ‫يدير‬
Administration ‫إدارة‬
Administrative services ‫الخدمات اإلدارية‬
Adopted ‫اعتمد‬
Agency ‫وكالة‬
Agency Funds ‫وكالة صناديق‬
Ancillary ‫مساعد‬
Annual budgets ‫والميزانيات السنوية‬
Annual Financial Reports ‫التقارير المالية السنوية‬
Annuity ‫مرتب سنوي‬
Assessing ‫تقييم‬
Assets ‫ممتلكات‬
Assisting ‫مساعدة‬
Authority ‫سلطان‬
Balance Sheet ‫الميزانية العمومية‬
Budgetary Control ‫مراقبة الميزانية‬
Budgetary Reporting ‫الميزانية التقارير‬
Budgeting ‫الميزنة‬
Budget ‫ميزانية‬
Capital Asset Sales/Losses ‫ الخسائر‬/ ‫مبيعات األصول الرأسمالية‬
Capital Assets ‫األصول الرأسمالية‬
Capital expenditures ‫النفقات الرأسمالية‬
Capital leases ‫رأس المال عقود اإليجار‬
Capital Projects Funds ‫مشاريع رأس المال صناديق‬
Cash ‫نقد‬
Cash Flows ‫التدفقات النقدية‬
Civil ‫مدني‬
Claims & judgments ‫المطالبات واألحكام‬
Classification ‫تصنيف‬
Classified ‫مصنف‬
Clinics ‫عيادات‬
Coding ‫الترميز‬
Collect the revenues ‫جمع العائدات‬
Commercial ‫تجاري‬
Communication ‫اتصاالت‬
Comparability ‫المقارنة‬
Comparing ‫مقارنة‬
Compensated ‫تعويض‬
Compensated absences ‫تعويض الغيابات‬
Competitiveness ‫القدرة التنافسية‬
Compliance ‫االمتثال‬
Component units ‫عنصر الوحدات‬
Conditions ‫شروط‬
Connection charges and other fee ‫رسوم التوصيل وغيرها من الدخل من‬
income ‫الرسوم‬
Conservation and development ‫الحفظ والتن‬
Consistency ‫اتساق‬
Contract services ‫عقد الخدمات‬
Contracts ‫عقود‬
Controls ‫ضوابط‬
Cultural services ‫الخدمات الثقافية‬
Current Funds ‫صناديق الحالي‬
Debt service ‫خدمة الدين‬
Debt ‫دين‬
Definition ‫تعريف‬
Demonstrating ‫مما يدل‬
Depreciation ‫خفض‬
Designated Funds ‫أموال مخصصة‬
Detect ‫كشف‬
Donated assets ‫تبرع األصول‬
Economic resources ‫الموارد االقتصادية‬
Effectiveness ‫فعالية‬
Efficiency ‫كفاءة‬
Electric Utilities ‫المرافق الكهربائية‬
Emphasis ‫تشديد‬
Encumbrances ‫االعباء‬
Endowment ‫هبة‬
Enterprise ‫مشروع‬
Environment ‫بيئة‬
Equipment operation and maintenance ‫تشغيل المعدات وصيانتها‬
Establishing ‫تأسيس‬
Estimated expenses ‫تقدر المصروفات‬
Exceptions ‫االستثناءات‬
Expenditure ‫إنفاق‬
Expenditure Recognition ‫اإلنفاق االعتراف‬
Expenses ‫النفقات‬
Fair market value ‫القيمة السوقية العادلة‬
Fair Value ‫القيمة العادلة‬
Fiduciary ‫الوكيل‬
Financial Reporting ‫التقارير المالية‬
Fines and forfeits ‫الغرامات والمصادرات‬
Fiscal ‫مالي‬
Focus ‫تركز‬
Forecasting ‫التنبؤ‬
Fund Accounting ‫صندوق المحاسبة‬
General Fund ‫الصندوق العام‬
General government ‫الحكومة العامة‬
Generally Accepted Accounting ‫مبادئ المحاسبة المقبولة عموما‬
Principles
Government ‫حكومة‬
Government-wide financial statements ‫الحكومة على نطاق البيانات الما‬
Grants ‫المنح‬
Health and social services ‫الخدمات الصحية واالجتماعية‬
Highways ‫الطرق السريعة‬
Historical cost ‫التكلفة التاريخية‬
Hospital ‫مستشفى‬
In Lieu of ‫وبدال من‬
Income Statement ‫بيان الدخل‬
Institution ‫مؤسسة‬
Intergovernmental ‫الحكومية الدولية‬
Internal Control ‫الرقابة الداخلية‬
Internal Service ‫الداخلية خدمة‬
International ‫دولي‬
Inter-period Equity ‫بين الفترة األسهم‬
Inventory ‫جرد‬
Investment income ‫االستثمار الدخل‬
Investment Trust Funds ‫صناديق االستثمار االستئماني‬
Laws ‫القوانين‬
Liabilities ‫الخصوم‬
Libraries ‫المكتبات‬
Local ‫محلي‬
Long term debt ‫الديون الطويلة األجل‬
Manage ‫إدارة‬
Market share ‫سوق األسهم‬
Materials & supplies ‫مواد ولوازم‬
Measurement ‫قياس‬
Modified ‫تعديل‬
National ‫وطني‬
Non-exchange ‫غير الصرف‬
Non-operating revenues ‫اإليرادات غير التشغيلية‬
Not-for-Profit ‫غير هادفة للربح‬
Objectives ‫األهداف‬
Operating supplies ‫تعمل اإلمدادات‬
Organization ‫منظمة‬
Outcomes ‫النتائج‬
Ownership ‫ملكية‬
Patient ‫المريض‬
Pay ‫دفع‬
Pension ‫معاش‬
People ‫الناس‬
Performance ‫أداء‬
Permanent ‫دائم‬
Permanent Funds ‫صناديق دائمة‬
Permits and licenses ‫التصاريح والتراخيص‬
Personal service costs ‫تكاليف الخدمة الشخصية‬
Plan ‫خطة‬
Planning ‫تخطيط‬
Plant Funds ‫مصنع صناديق‬
Policy ‫سياسة‬
Political ‫سياسي‬
Power ‫قوة‬
Prepayments ‫دفع مسبق‬
Prevent ‫منع‬
Primary government ‫الحكومة االبتدائي‬
Principles ‫مبادئ‬
Private-purpose Trust Funds ‫حسابات األمانة الخاصة ألغراض‬
Problems ‫مشاكل‬
Proceeds ‫العائدات‬
Project ‫مشروع‬
Proportional ‫نسبي‬
Proprietary ‫الملكية‬
Public ‫جمهور‬
Public Safety ‫السالمة العامة‬
Public works ‫األشغال العامة‬
Recognition ‫اعتراف‬
Recommended ‫موصى به‬
Recreation ‫استجمام‬
Recreation Funds ‫الترفيه صناديق‬
Redeemed ‫افتدى‬
Regulations ‫قوانين‬
Reliability ‫دقة‬
Repairs and maintenance ‫اإلصالح والصيانة‬
Reporting entity ‫اإلبالغ الكيان‬
Reserve funds ‫األموال االحتياطية‬
Resources ‫موارد‬
Responsibility ‫مسؤولية‬
Restricted ‫مقيد‬
Return on investment ‫العائد على االستثمار‬
Revenues ‫اإليرادات‬
Review ‫مراجعة‬
Ruling ‫الحاكم‬
Salaries and wages ‫الرواتب واألجور‬
Schedule ‫جداول‬
Self-balancing ‫ذاتية التوازن‬
Separate ‫مستقل‬
Services ‫الخدمات‬
Sick Leave ‫إجازة مرضية‬
Sold ‫بيع‬
Solid Waste Funds ‫صناديق النفايات الصلبة‬
Sovereign ‫سيادة‬
Special Revenue Funds ‫صناديق اإليرادات الخاصة‬
Statement of Stockholders’ Equity ‫بيان حقوق المساهمين‬
Stewardship ‫إدارة‬
Taxpayer ‫دافع الضرائب‬
Term ‫مصطلح‬
Transactions ‫المعامالت‬
Transfer ‫نقل‬
Typically ‫عادة‬
Unrestricted ‫مطلق‬
Unwanted ‫غير مرغوب فيه‬
Utilities ‫خدمات‬
Wastewater Funds ‫مياه الصرف الصحي صناديق‬
Water Funds ‫صناديق المياه‬

ACC 231 Cost Accounting 2022

Uploaded by

Copyright:

Available Formats

ACC 231 Cost Accounting 2022

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

ACC 231 Cost Accounting 2022

Uploaded by

Copyright:

Available Formats

Kingdom of Saudi Arabia

Jazan Community College

Cost Accounting - ACC 231

Unit 2: Cost accounting – Nature, Scope & Objective

Unit 3: Cost accounting – Need and Uses

Unit 4: Cost concepts and classification

Unit 5: Cost Analysis for Decision Making

Unit 6: Preparation of Cost Sheet

Unit 7: Standard Costing and Variance Analysis

Unit 8: Cost Ledger Accounting

Unit 9: Cost-Volume-Profit Analysis

Unit 10: Process Costing

Part III (Exam – Final)

Unit 11: Accounting for Material: Material control Concept

Unit 12: Technique - FIFO (First in First Out)

Unit 13: Technique - LIFO (Last in First Out)

Unit 14: Technique - Weighted Average Method

Unit 15: Reconciliation of Cost and Financial Accounting

What Does Cost Accounting Mean?

********What is the main purpose of cost accounting?

Managers, Measure and record, Evaluating, Weighing, Industrial revolution

 Cost accounting is a method of Evaluating costs, profits and everything in between

 Cost accounting is a means of Weighing projected profits against projected costs by

 Cost accounting is a means of weighing projected profits against projected costs by

Question: - Choose the correct answer from the following words:-

 Cost accounting is a method of ……………………costs, profits and everything in

 Cost accounting will first ………………………….these costs individually, then compare

(c) Weighing (d) Evaluating

 Cost accounting is a means of ……………………….projected profits against projected

(c) Weighing (d) Evaluating

(c) Weighing (d) Evaluating

Cost Control, Cost Accounting, Cost Ascertainment, Management

 Cost accounting helps Management in planning, control and decision-making. It is

 Cost accounting helps management in planning, control and decision-making. It is

Question: - Choose the correct answer from the following words:-

(c) Cost Ascertainment (d) Cost Accounting

 ………………………..: - it deals with the collection and analysis of expenses, the

(a) Cost Control (b) Management

(c) Cost Ascertainment (d) Cost Accounting

 ………………………..: - it is the process of accounting for cost which begins with

(a) Cost Control (b) Management

(c) Cost Ascertainment (d) Cost Accounting

 ………………………..: - it is the guidance and regulation by executive action of the

(a) Cost Control (b) Management

(c) Cost Ascertainment (d) Cost Accounting

Uses of Cost accounting

Efficiency, Guides, Disclosed, Information

 Profitable and unprofitable activities are Disclosed.

 Profitable and unprofitable activities are hided. X

Question: - Choose the correct answer from the following words:-

(c) Guides (d) Information

(c) Guides (d) Information

 It provides ……………………upon which estimates and tenders are based.

(c) Guides (d) Information

(c) Guides (d) Information

Materials Labour Other Expenses

Direct Indirect Direct Indirect Direct Indirect

Production Administration Selling Distribution

 Prime Cost = Direct Materials + Direct Labour + Direct Expenses

 Cost of Production = Works Costs + Administration Overheads