Forming a vital component of Accounting studies and practice, Cost and Management Accounting aims to manage and optimally reduce costs along with ensuring that the set standard of cost-related procedures are followed. In an enterprise, small or big, profitability is a function of both cost and revenue, i.e, favourable cost and revenue numbers translate into higher profitability and vice versa. This blog will focus on summarising in brief what is cost and management accounting, the exams in which it is a core part and its varied other features.
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What is Cost and Management Accounting?
In today’s world, business/financial decisions are largely tripoded on heavy amount of analysis of data related to the financial aspects of business and cost and management accounting aims to make those decisions in an informed manner. Since costing considers both fixed and variable costs arising throughout the line of business of the corporation, be it manufacturing, production and services industry, it helps in calculation of a comprehensive measure of analysis.
The subjects covered under cost and management are vast and not only including the various types of costs but also includes the study of variegated costing methods, budgeting techniques and cost audit, amongst others. They help managers understand and interpret cost-related information, in turn aiding him to interpret overall financial statements of a company. In the long run, to adopt new-age and innovative cost optimisation systems, managers rely on this information as well. Some of the major subjects under Cost and Management Accounting include:
- Material and Labour Cost
- Direct Expenses & Overheads
- Cost Records
- Costing Systems
- Marginal Costing
- Standard Costing
- Budget, Budgeting and Budgetary Control
- Activity-Based Costing
- Cost Accounting Records and Cost Audit
- Analysis and Interpretation of Financial Statements
Note: This list of subjects has been taken from ICAI’s Cost and Management Accounting Paper Syllabus.
Also Read: How to Become a Chartered Accountant
Exams & Courses[optin-monster-shortcode id=”xf2mlnjiouddzrshykdb”]
Firstly, Cost and Management Accounting is part of Module 1: Paper 2 in CS Executive Syllabus and in Intermediate [Paper 3] of the CA course. Further, it is included in a plethora of undergraduate and graduate-level Accounting courses such as BCom, BFM Course and MBA in Accounting, amongst others. Further, management accounting is also offered by the globally recognised ACCA certifications.
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In order to study Cost and Management Accounting in detail, several books are recommended, out of which a few have been mentioned below.
|1||A Textbook of Cost and Management Accounting by M. N. Arora||Click Here|
|2||Padhukas Student handbook on Cost and Management Accounting:
CA Inter New Syllabus by CA B. Saravana Prasath
|3||Cost Accounting: Texts & Problems by M. C. Shukla and T.S.Grewal||Click Here|
|4||Modern Cost and Management Accounting by Hanif||Click Here|
|5||Cost & Management by Ravi M. Kishore [with CD]||Click Here|
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Cost Accounting vs Financial Accounting
While costing techniques help in making managerial decisions within a company more effective, financial accounting is undertaken solely from the perspective of an outsider. It mainly concerns customers, investors, creditors, auditors etc. who have an existing or potential interest in the company. On the other hand, the motive of Cost and Management Accounting is to improve cost-related processes within the organisation. Tasks may include, determination of standard costs of a particular procedure, measure of the current cost [based on performance]. Comparison and contrasting of results obtained and figuring out solutions as to the aspiring disparities. Further, cost accounting also aims to reduce the overall costs as well reducing the overall burden on capital.
Though Cost and Management Accounting or, in general, Accountant courses, are extensively technical, offer exciting and lucrative career opportunities in industries of Finance, Consulting and Strategy, amongst others. Needless to say, to enter such fields requires consistent efforts and single-goal oriented approach. Consult the experts at Leverage Edu and we’ll guide in finding a suitable course and university that can equip you with immense knowledge and exposure to make a successful career in Accounting.