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Cost Accounting: 2 Mark Q&A Guide

The document provides a concise overview of key concepts in cost accounting, including definitions and objectives such as determining production costs and controlling operations costs. It covers material cost control, labor costs, overheads, and the reconciliation of cost and financial accounts, highlighting important terms like material control, time rate system, and allocation of overheads. Additionally, it addresses reasons for discrepancies between cost and financial profits.

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69 views2 pages

Cost Accounting: 2 Mark Q&A Guide

The document provides a concise overview of key concepts in cost accounting, including definitions and objectives such as determining production costs and controlling operations costs. It covers material cost control, labor costs, overheads, and the reconciliation of cost and financial accounts, highlighting important terms like material control, time rate system, and allocation of overheads. Additionally, it addresses reasons for discrepancies between cost and financial profits.

Uploaded by

kkarthi01661
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Cost Accounting - 2 Mark Answers

Unit I - Introduction to Cost Accounting

Q: What is cost accounting?


A: Cost accounting is the process of recording, classifying, analyzing, and allocating all costs
associated with a process to determine the cost of products or services.

Q: Mention any two objectives of cost accounting.


A: - To determine the cost of production.
- To control and reduce the cost of operations.

Unit II - Material Cost Control

Q: What is material control?


A: Material control is a system that ensures the availability of materials at the right time, quantity,
and cost.

Q: What is the perpetual inventory system?


A: A system where stock records are continuously updated after every receipt and issue.

Unit III - Labour Cost

Q: Define time rate system.


A: Under the time rate system, wages are paid based on the amount of time worked.

Q: What is job evaluation?


A: It is the process of analyzing and assessing the value of a job in relation to other jobs.

Unit IV - Overheads

Q: What are overheads?


A: Indirect costs that cannot be directly traced to a product, such as rent and utilities.

Q: What is allocation of overheads?


A: Allocation refers to the assigning of whole items of cost to a cost center or cost unit.

Unit V - Reconciliation of Cost and Financial Accounts

Q: What is reconciliation?
A: Reconciliation means matching the profit or loss shown by cost accounts with that shown by
financial accounts.
Q: Mention any two reasons for the difference between cost and financial profit.
A: - Under/over-absorption of overheads.
- Stock valuation differences.

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