Strategic Cost Management (SCM)

Definition: Strategic Cost Management or otherwise called as SCM is the cost management technique that aims at reducing costs while strengthening the position of the business. It is a process of combining the decision-making structure with the cost information, in order to reinforce the business strategy as a whole. It measures and manages costs to…

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Cost Accounting

Definition: Cost Accounting implies a branch of accounting which deals with recording, classifying, accumulation, allocation and control of the cost of production. It captures the incomes and expenditures and prepares statements and reports for the respective period, so as to determine and control costs. It aims at keeping a record of the cost of production,…

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Standard Costing

Definition: Standard Costing is a costing method, that is used to compare the standard costs and revenues with the actual results, in order to arrive at the variances along with its causes, to inform the management about the deviations and take corrective measures, for its improvement. The term ‘standard cost’ can be defined as the…

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Process Costing

Definition: Process Costing is defined as a branch of operation costing, that determines the cost of a product at each stage, i.e. process of production. It is an accounting method which is adopted by the factories or industries where the standardized identical product is produced, as well as it passes through multiple processes for being…

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Budget

Definition: In the general sense, the budget is described as a precise statement, representing a financial estimate of income and expenditure of the government for a certain period. In cost accounting, budget means a quantitative statement, prepared before a particular period to serve as an estimate of future receipts and disbursements. The integrated process of…

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Golden Rules of Accounting

Definition: In Double entry system, due to its dual aspect, every transaction affects two accounts, one of which is debited and other is credited. To record the transactions in the journal, in a sequential way, certain rules are required, and these rules are called as Golden Rules of Accounting. Types of Account To understand the…

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Cost Sheet

Definition: Cost Sheet, as the name signifies, is a periodical statement that reflects a detailed overview of the cost incurred on various components during the process of production. It is used to determine the cost of a cost object, i.e. product, service, or a cost unit. Specimen of Cost Sheet Cost Sheet helps in the…

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Accrual Concept

Definition: The accrual concept is one of three basic accounting concept, others are going concern and consistency. As per this concept, the recognition of the transactions and events as and when they arise, i.e. on mercantile basis, rather than on cash basis in which the transaction is recorded in the books of accounts when the…

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Depreciation

Definition: Depreciation is the reduction in the utility of the fixed asset like plant & machinery, furniture & fixtures, vehicles, buildings, etc. because of obsolescence through technology or market conditions, natural wear and tear, the passage of time, exhaustion of subject matter and so on. Depreciation is a measure which calculates loss in the value…

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Cash Flow Statement

Definition: Cash Flow Statement refers to an Analytical Reconciliation Statement, which shows the changes in the position of cash and cash equivalents between two periods. In addition to this, it emphasizes the reasons for such movement of cash. Cash equivalents are those investments which are short term as well as highly liquid in nature, that…

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