New Cost Accounting Concepts.

Abstract As cost accounting is closely related to cost control and the planning of business enterprises, other academic disciplines have shown more interest in the problem in recent years. There have been many special research bulletins of the National Association of Cost Accountants, there is a special committee of the American Accounting Association and the English magazine Accounting Research has had several articles bearing on the subject and the Journal of Accountancy has devoted space to the subject. The present article discusses the application of cost accounting to manufacturing functions, but the concepts are similarly applicable, in differing degrees, to distribution, selling and other functions of business as well as to government to nonprofit organizations. The main purposes of cost accounting is summarized as income determination, with the cost of goods sold and the inventory valuations being the main results of cost accounting, balance sheet presentation, with the inventory items, the balances in the prepaid and accrued expense accounts and the residual value of fixed assets being related to cost accounting and control of cost by management made possible by having available adequate data to judge performance quickly and also having data for future planning.