Cost Accounting and Cost Accounting System - Assignment Example

Cost accounting refers to the process of measuring, ifying, analyzing and collecting costs of a job, product. In summary, it is also the act of accounting for the occurrence and controlling costs with the objective of ascertaining operating efficiency of a business. On the other hand, cost accounting systems are the internal information systems structures and procedures that are applied by a company to ensure proper cost accounting. Cost system is one of the scopes of cost accounting, although both have a common objective of providing relevant decision making information to the management (Lal. 2008).The most important feature of a cost accounting system is the regularity with which relevant cost information is provided to users.

There are two types of cost accounting systems the job order cost and process order systems. Job order cost system operates by provides I cost information in regard to each quantity of product/ service in batches. It is mostly applicable in factories with wide variety of product/service lines e.g. accounting firms and apparel manufacturing industry.Secondly, process order cost system refers to the process of accumulating costs by department or process in a factory. It is applicable mostly in cases of continuous productions such as oil refineries and food processing industries.

Several companies use both types of cost accounting systems due to the diversity of their product/services pressing and the need for a cost system that provides relevant decision making information. In addition, it enhances flexibility and accuracy contributing to a more effective operational and strategic control.ReferencesLal, Jawahar. 2008. Cost Accounting. New York: Tata McGraw-Hill Education.