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CA Intermediate · Cost and Management Accounting · Introduction to Cost and Management Accounting

Which of the following is a feature of cost accounting as distinct from financial accounting, as studied in the Introduction chapter?

Cost accounting supplies cost information for internal planning, control and decision-making by management. Statutory external reporting, a rigid legal format and recording only dealings with outsiders belong to financial accounting, so those options do not describe cost accounting.

  1. AIt is prepared mainly to satisfy statutory requirements for external reporting
  2. BIt records only transactions that have actually taken place with outsiders
  3. CIt provides cost data for planning, control and decision-making inside the organisationCorrect
  4. DIt is always governed by a rigid format prescribed by the Companies Act

Explanation

Cost accounting is meant chiefly for management's internal use: planning, controlling costs and decision-making. External statutory reporting, recording of only external transactions and prescribed statutory formats are characteristics of financial accounting.

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