An overview of cost and management accounting
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the primary objective of cost accounting?
The primary objective of cost accounting is to ascertain the cost of products or services, enabling management to control costs and make informed pricing and production decisions.
What is meant by 'opportunity cost' in management decision-making?
Benefit foregone by choosing one alternative over another.
How does management accounting differ from financial accounting?
Management accounting focuses on providing internal information to management for planning, controlling, and decision-making, whereas financial accounting records and reports financial data for external stakeholders.
What is the distinction between cost accounting and management accounting?
Cost accounting measures costs; management accounting aids planning and control.
What is meant by the term 'cost' in cost accounting?
Cost refers to the amount of expenditure (actual or notional) incurred on or attributable to a specified article, product, or activity, measured in monetary terms.
What is a 'sunk cost' and why is it irrelevant to future decisions?
A cost already incurred and cannot be recovered regardless of future actions.
What are the three main elements of cost?
The three main elements of cost are material cost, labour cost, and overhead (or expenses), which together constitute the total cost of producing a product or service.
What is 'differential costing' used for in managerial decisions?
Analyzing cost differences between two or more alternative courses of action.
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