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CMA Foundation · Fundamentals of Financial and Cost Accounting · Cost, Cost Centre, Cost Unit and Cost Drivers

In cost accounting terminology, the term 'costing' is best described as:

Costing is the technique and process of ascertaining the cost of products, services or activities. It is not general bookkeeping of all transactions, preparation of final accounts, or cost audit, which is verification of cost records. Costing focuses on determining how much was spent to make something.

  1. AThe technique and process of ascertaining the cost of products or servicesCorrect
  2. BThe systematic recording of all financial transactions of a business
  3. CThe preparation of the annual balance sheet and profit and loss account
  4. DThe verification of cost records by an independent professional

Explanation

Costing means the techniques and processes of ascertaining costs of products, services or activities. Recording all financial transactions is financial accounting, and annual statements are its output. Verification of cost records is cost audit, not costing.

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