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CMA Foundation · Fundamentals of Financial and Cost Accounting · Meaning and Significance of Cost Accounting and its Relationship with Financial Accounting

Which of the following is a function of cost accounting, as opposed to merely a limitation of it?

Providing cost data for fixing selling prices and controlling costs is a core function of cost accounting. The other statements describe limitations or characteristics, such as dependence on estimates and arbitrary apportionment, rather than functions it performs for management.

  1. AProviding cost data to help fix selling prices and control costsCorrect
  2. BBeing unable to value estimated or future costs reliably
  3. CDepending on estimates and apportionments that may be arbitrary
  4. DHaving no statutory form like financial accounts

Explanation

Supplying cost data for pricing and cost control is a core function. The other options describe weaknesses or characteristics, such as reliance on estimates, arbitrary apportionment, or lacking statutory form.

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