Cost Accounting Practices - Research Paper Example

The paper "Cost Accounting Practices" is a great example of a research paper on finance and accounting. In the United States, activity-based costing (ABC) is prevalent and is regarded as the most widely applied costing technique by business entities; whereas in Germany Grezplankostenrechnung (GPK) is applied as an alternative to activity-based costing. Apart from this, German costing techniques are often referred to as more controlling; whereas in the United States, managerial accounting is the term used to refer to cost management practices in organizations.

However, the institutional purpose of both is the same. In this study, the researcher has compared the cost accounting practices of the two countries in light of major cost accounting frameworks and techniques employed by business entities operating therein. By reviewing the available literature and empirical evidence in relation to the identified research aim, the researcher has concluded that there are significant differences in the costing methods and techniques used by companies operating in both countries and that these differences have primarily emerged from the principles on which costing and controlling methods prevalent in the two countries are based.

Moreover, on the basis of findings and evaluation, it has also been argued that by way of merging some of the concepts of both accounting techniques can result in enhanced and more effective management of costs which will be beneficial for cost controllers and managers in both countries. 1 Introduction Keeping in view the advancements in businesses and the increasing need for harmonization and matching of ways business are being conducted all over the world, there has been an increased need felt for examining and dealing with the differences in business processes of corporate entities all over the globe (Hoffjan, Nevries, & Stienemann, 2007).

Considering these increasingly important aspects of globalization, this paper focuses on comparing the cost accounting practices prevalent in the United States and Germany. In the United States, activity-based costing (ABC) is prevalent and is regarded as the most widely applied costing technique by business entities; whereas in Germany Grezplankostenrechnung (GPK) is applied as an alternative to activity-based costing. Apart from this, German costing techniques are often referred to as more controlling; whereas, in the United States, managerial accounting is the term used to refer to cost management practices in organizations.