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Why is Cost Accounting So Important to the Success of the Firm?
Finance & Accounting
Pages 4 (1004 words)
Accounting is one of the basic business functions of an organization. Accountants are responsible for keeping track of the economic activity of the business. The two most important branches of accounting are financial and cost accounting.
Cost accounting is very important because it provides relevant information that can be used by the managerial staff to make decisions. The information provided by cost accounting is mainly used internally by corporations. The purpose of this paper is to describe the importance of cost accounting for a firm. Cost accounting provides relevant information that can be used by both managers and financial accountants. It can be used to measure and report financial and non-financial information that relates to the cost of acquiring or consuming resources by an organization (Horngren & Foster & Datar, 2000). Accountants can be flexible in their applications of cost accounting due to the fact that cost accounting does not have to comply with the generally accepted accounting principles (GAAP). Accountants also use cost accounting to describe the future activities of an organization. The information compiled by cost accounting can be useful both in the short and long term. The planning function of an organization benefits a lot from cost accounting. Another important benefit of cost accounting is that it allows companies to compute the cost of a product. ...
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