CMA Foundation · Fundamentals of Financial and Cost Accounting · Cost, Cost Centre, Cost Unit and Cost Drivers
Which of the following best describes 'costing' as distinct from 'cost accounting' in the terminology of cost accountancy?
Costing is the technique and process of ascertaining costs. It deals with determining how much an activity, product or service costs. Cost accounting is broader and includes recording, classifying, allocating and reporting of cost information. Preparation of final accounts belongs to financial accounting, not costing.
- AThe technique and process of ascertaining costsCorrect
- BThe preparation of the final accounts of a firm
- CThe statutory audit of cost records only
- DThe fixing of selling price by the sales department
Explanation
Costing is the technique and process of ascertaining cost. Cost accounting is wider and covers recording, classifying, allocating, summarising and reporting costs. Preparing final accounts is financial accounting, so that option is wrong.
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