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Questions and Answers
What is the main function of cost accounting?
To determine how much an object, project, or service costs.
Cost accounting only considers monetary values.
False
Which of the following is NOT a user of cost accounting?
Cost accounting integrates with __________ accounting for product costing information.
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What does a controllable cost represent?
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What is the difference between cost and expense in financial accounting?
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Study Notes
Cost Accounting
- Primary function is to determine the cost of an object, project, or service.
- Determines product and service costs.
- Identifies, defines, and analyzes costs in producing and marketing goods and services.
Cost Accounting vs. Financial Accounting
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Cost Accounting:
- Focus: Primarily on determining product/service costs.
- Users: Primarily internal users (management).
- Objective: To reflect the correct financial information of the company.
- Methods: Uses direct measurement, arbitrary assignment, and systematic allocation to determine product cost.
- Integration: Integrates with financial accounting for product costing information for financial statements. Integrates with management accounting for quantitative, cost-based information.
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Financial Accounting:
- Users: Both internal and external users.
- Objective: To determine the product and service cost.
- Methods: Considers both items with monetary and non-monetary values.
- Integration: Reports financial statements.
Cost vs. Expense
- Cost: Represent amounts paid for goods or services. Appears as an asset on the financial statement (e.g., equipment purchase).
- Expense: Represent amounts paid for business operations. Necessary to generate revenue.
Controllable Costs
- Costs that a manager can significantly or heavily influence its incurrence (e.g., adjusting raw materials based on project).
Uncontrollable Costs
- Costs that a manager cannot significantly influence its incurrence (e.g., rent).
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Description
This quiz explores the fundamentals of cost accounting, including its primary functions and how it differs from financial accounting. Learn about product cost determination, user focus, and the integration between cost and financial accounting. Test your knowledge on key concepts and methods used in cost analysis.
