Communiquez avec les autres et partagez vos connaissances professionnelles

Inscrivez-vous ou connectez-vous pour rejoindre votre communauté professionnelle.

Suivre

What are the limitations of cost accounting?

user-image
Question ajoutée par Mohammed El Tahir Mohammed Yousif , Finance Manager , Factory of Golden Block Company for Cement Products
Date de publication: 2018/08/18
Mohammed El Tahir Mohammed Yousif
par Mohammed El Tahir Mohammed Yousif , Finance Manager , Factory of Golden Block Company for Cement Products

  • It is based on estimation: as cost accounting relies heavily on predetermined data, it is not reliable.
  • No uniform procedure in cost accounting: as there is no uniform procedure, with the same information different results may be arrived by different cost accounts.
  • Large number of conventions and estimate: There are number of conventions and estimates in preparing cost records such as materials are issued on an average (or) standard price, overheads are charged on percentage basis, Therefore, the profits arrived from the cost records are not true.
  • Formalities are more: Many formalities are to be observed to obtain the benefit of cost accounting. Therefore, it is not applicable to small and medium firms.
  • Expensive: Cost accounting is expensive and requires reconciliation with financial records.
  • It is unnecessary: Cost accounting is of recent origin and an enterprise can survive even without cost accounting.
  • Secondary data: Cost accounting depends on financial statements for a lot of information. Any errors or short comings in that information creep into cost accounts also.

More Questions Like This