OVERVIEW OF COST AND MANAGMENT 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 66 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 and to help management in cost control, cost reduction, and decision-making.
What is 'sunk cost' and why is it irrelevant to future decisions?
Past cost already incurred and unrecoverable; ignored in future planning.
How does Management Accounting differ from Financial Accounting?
Management Accounting is forward-looking and focuses on internal reporting for managerial decisions, whereas Financial Accounting records historical transactions and prepares reports for external stakeholders.
What is 'differential cost' in management accounting decision-making?
Cost difference between two alternative courses of action.
What is meant by the term 'cost centre' in cost accounting?
A cost centre is a location, person, or item of equipment for which costs may be ascertained and used for the purpose of cost control; it can be a department, machine, or individual.
What does 'target costing' mean in cost management?
Setting cost from market price minus desired profit margin.
What is a 'cost unit' in the context of cost accounting?
A cost unit is a unit of product or service in relation to which costs are ascertained, such as per tonne, per litre, per loan account processed, or per transaction in banking.
What is 'life cycle costing' in management accounting?
Tracking total costs over entire product life from design to disposal.
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