The Synergy between Cost Accounting And Management
The main aim of the cost accounting is to create the budgets as well as to establish the true cost of the operations that the company is involved in. Cost accounting is done in order to make sure that the company does not suffer losses or to make sure that the profits do not suffer. Also it is important that the amount of money that the company is putting in the resources is utilized properly and also to make sure that the loss making units are either closed down or spruced up. The cost accounting on the basis of various concepts as well as using some of the advanced techniques can make sure that the reports that it prepares are accurate.
One thing that needs to be emphasized is that the cost accounting is a part of the management accounting. As a result it does not have to adhere to the guidelines or principles as laid down by any of the accounting body like GAAP. The cost accounting is done primarily to prepare financial reports that are to be studied by the internal managers in order to get the correct picture of the finances as well as to make sure that the proper utilization of all the resources of the company is done. It can be verily said that cost accounting and management go hand in hand. Management relies heavily on the accounting reports that are prepared by the cost accountants and all their decisions are based on these reports. Even the higher echelons like the board of directors also analyze the reports prepared and the analysis that is done by the cost accountants.
Cost accounting and management share a synergy that is very much necessary for the overall growth of the company. The healthier this relationship is the better it is for the company and everybody else who is associated with it.