IPCC Notes and Summaries || 3

Job costing and process costing are the two methods of cost accounting.  Job costing is applied  where production is carried out under specific orders, depending upon customers requirement.  Here each job is considered as a cost unit and to some extent the cost centre also.

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Cost plus contracts are advantageous both for the manufacturer and the customer, as neither party stands to lose. A fair price is offered to the customer and a reasonable profit accrues to the manufacturer.

Budgets. A budget is a financial and/or quantitative statement, prepared prior to a defined period of time, of the policy to be pursued during that period for the purpose of attaining a given objective & must be approved.

Cost accounting is the application of accounting and costing principles, methods and techniques in the ascertainment of costs and the analysis of savings and/or excess as compared with previous experience or with standards.

 

CIMA defines Cost Accounting as ”the establishment of budgets, standard costs and actual costs of operations ,processes, activities or products, and the analysis of variances, profitability or the social use of funds.”

The term “Verbal” implies ‘use of words’ which makes language. Verbal communication means communication through spoken and written words. The process of communication involves the use of a common set of language between the sender and the receiver. Words are the most accurate and powerful symbols. Therefore, most of the communication in work organization takes place through words.

A partnership can be defined as a form of business organization in which two or more people join together to carry on a business with a view to make profit.

The way to prepare the accounts of partnerships is similar to that of other trading concerns.  However, in partnerships,

Types of Insurance, Calculation of insurance claim for loss due to fire, average clause in Insurance Claims

Electricity Company accounts are prepared by following the double accounting system. Accounts are made on Double Accounting System because a Public Utility company cannot invest in fixed Assets until & unless it arranges for some long-term liabilities. In other words such companies cannot use its short-term fund for financing fixed assets. Thus in this system of accounting the: