Cost Accounting - Unit 1

What is the primary objective of cost accounting?

• Preparation of financial statements

• Budget forecasting

• Ascertainment and control of cost

• Auditing business transactions

Cost accounting helps in:

• Selling goods

• Filing income tax returns

• Determining product cost and efficiency

• Calculating interest

Which of the following best defines cost accounting?

• Recording financial transactions

• Valuation of assets

• Process of accounting for cost

• Investment analysis

Financial accounting focuses on:

• External reporting

• Internal cost control

• Product pricing

• Stock levels

Cost accounting is mainly used by:

• Government agencies

• Tax consultants

• Internal management

• Investors

Which of these is a key difference between cost accounting and financial accounting?

• Cost accounting is for internal use; financial accounting is for external use

• Cost accounting is mandatory

• Financial accounting is for budgeting

• Cost accounting includes only variable cost

Prime cost includes:

• Direct materials + Indirect labour

• Indirect cost + Selling cost

• Direct materials + Direct labour + Direct expenses

• Overheads

Indirect expenses are classified under:

• Direct cost

• Variable cost

• Overheads

• Marginal cost

Which of the following is not a classification of cost?

• By nature

• By function

• By time

• By bank

The classification of cost based on behavior includes:

• Functional and direct

• Fixed, variable, and semi-variable

• Marginal and absorption

• Historical and estimated