Reasons for good stock control:
1. Good stock control helps the business minimise storage costs (e.g. heating, lighting, security). 2. Good stock control helps the business avoid loss of sales and thus revenue due to items not being in stock. 3. Good stock control helps the business minimise the risk of theft, deterioration and obsolescence. 4. Good stock control helps the business improve its customer service (e.g. the ability to inform customers when new stock will arrive. 5. Good stock control helps the business avoid costly emergency buying. 6. Good stock control helps the business be more reliable and thus avoid loss of goodwill of customers.
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. Cost accounting information is commonly used in financial accounting information, but its primary function is for use by managers to facilitate making decisions.
Unlike the accounting systems that help in the preparation of financial reports periodically, the cost accounting systems and reports are not subject to rules and standards like the Generally Accepted Accounting Principles. As a result, there is wide variety in the cost accounting systems of the different companies and sometimes even in different parts of the same company or organization.
2 Cost Accounting vs Financial Accounting
3 Types of cost accounting
4 Elements of cost
5 Classification of costs
Please join StudyMode to read the full document