Book Cost

Definition: The Book Cost refers to those expenses which do not involve actual cash payments, but rather the provisions are made in the books of accounts to include them in the profit and loss accounts and avail the tax advantages.

In other words, the expenses which are not payable in cash, but rather their provisions are made in the books of accounts while finalizing the profit and loss statement, is called as book costs. Simply, we can say that these are the payments that firm pays it to itself. The provision for depreciation, unpaid interest on owner’s fund or capital are the examples of book cost.