2018 WASSCE PRINCIPLE OF COST ACCOUNTING

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COST ACCOUNTING QUESTIONS LOADING






ANSWERS LOADING

COST ACCOUNTING COMPLETE SECTION A

ANSWER ONLY 2 QUESTION

(1a)
Reliability

Accounting information is reliable to the extent that users can depend on it to represent the economic conditions or events that it purports to represent.
 If the information is not reliable, then no investor can rely on it to make an investment decision.

Comparability

- Accounting information that has been measured and reported in a similar manner for different enterprises is considered comparable.

Consistency

Accounting information is consistent when an entity applies the same accounting treatment to similar accountable events from period to period.

Comparability -
Comparability is a pervasive problem in financial analysis even though there have been great strides made over the years to bridge the gap.


(1b)
= Cost accounting deals with the internal aspect of the business. As a result, cost accounting helps to improve the flaws of a company. Financial accounting, on the other hand, handles the external aspect of the company.

=Cost accounting is used basically to reduce cost and to improve the efficiency of business processes. Cost accounting acts as a tool for management. On the other hand, financial accounting doesn’t concern itself about controlling anything; rather its objective is to create a true and fair picture of the financial affairs of the company.

=Cost accounting is a lot about knowing the pixel view of a business. On the contrary, financial accounting shows us the big picture.

=Cost accounting is not mandatory and applicable for all organizations. Only the organizations which are engaged in manufacturing activities are bound to report through cost accounting. On the other hand, financial accounting is mandatory for all organizations.

=In cost accounting, estimation has a great value in determining and comparing the cost of sales per unit. In financial accounting, every transaction and reporting is based on actual data.


(3a)
Standard Costing
Standard costing is the practice of substituting an expected cost for an actual cost in the accounting records, and then periodically recording variances showing the difference between the expected and actual costs.

(3b)
1. Fundamental standards-
Which concern terminology, conventions, signs and symbols, etc.;

2. Test methods and analysis standards -
Which measure characteristics such as temperature and chemical composition;

3. Specification standards-
Which define characteristics of a product (product standards), or a service (service activities standards) and their performance thresholds such as fitness for use, interface and interoperability, health and safety, environmental protection, etc.;

4. Organization standards-
Which describe the functions and relationships of a company, as well as elements such as quality management and assurance, maintenance, value analysis, logistics, project or system management, production management, etc.


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