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CMA Intermediate · Cost Accounting · Introduction to Cost Accounting

Which of the following best describes the primary objective of cost accounting in a manufacturing firm?

The primary objective of cost accounting is to ascertain the cost of products and services and to supply information for cost control and managerial decision making. Preparing statutory statements, tax computation and cash recording belong to financial accounting or other functions.

  1. AAscertaining the cost of products and services and providing information for cost control and decision makingCorrect
  2. BPreparing statutory financial statements for filing with the Registrar of Companies
  3. CComputing the income tax liability of the firm for the year
  4. DRecording only the cash receipts and payments of the business

Explanation

Cost accounting exists mainly to ascertain cost of products or services, control cost and supply data for managerial decisions. Statutory financial statements are the function of financial accounting, and tax computation and cash recording are not its main aim.

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