Cost Accounting: Its role and ethical considerations Essay -- Business

make up be Its role and ethical considerationsIntroduction accounting system system is the process of identifying, measuring, andcommunicating stinting information about an entity for the purpose of devising decisions and certain judgements. The major argonas of at heartthe accounting are Financial Accounting, Managerial Accounting/ tollAccounting and Auditing- Public AccountingManagerial accounting is concerned with the function of frugal andfiscal information to plan and control the activities of an entityand to support the management in planning and decision- make process.Cost accounting is the subset of managerial accounting and it helpsmanagement in determination and accumulation of product, process orservice cost.Role of Cost AccountingIncreased competition and uncertain business conditions have ratesignificant pressure on corporate management to make informed businessdecisions and maximize their company?s financial performance. In answer to this pressure, a range of ma nagement accountingtools and techniques has emerged. One of the most fundamental tools thata management can use is - Cost Accounting. Cost accounting helpsmanagement in making strategic decisions by identifying anorganization?s comparative strengths and weaknesses and a better waysto use, improve or disapprove them. Cost information is use for manydifferent purposes Performance meter Cost reduction and control Determination of reimbursement and fee or determine setting Program authorization, modification, and discontinuation decisions and Decisions to contract out work or make other changes in the methods of production or deli very(prenominal) of services.Cost accounting provides various tools for example Cost-benefitanalysis, break-even analysis,and CVP to help management in making decisions.Role of Ethics in Cost AccountingWebsters Dictionary defines moral philosophy as ...the principles of conductgoverning an individual or a professing the discipline dealing withwhat is go od or bad or undecomposed and wrong, or with moral duty andobligation a particular possible action or system of moral values. Ethics arevery important in any field. In cost accounting too ethics play animportant role. Ethical situations can easily trick up in any businesssetting when money is involved. . The whole Enron saga was the case... ...g is an important tool that can help management inmaking informed decision. Though it is not legally required but restrainedit is necessary to run an entity effectively. Cost accounting isturned toward the future. There are different methods of be inCost Accounting Absorption costing and Variable costing. Both havesome merits over the other.An entity can use both of them for different uses. Absorption costingcan be used for external reporting, managers need to review the effectof their decision on financial reporting to outsiders whereas Variablecosting can be used by managers to review the effect of managementdecisions on production, costs and profits.ReferencesAbsorption, Variable, and Throughput Costing. Retrieved on December15,2004 fromhttp//www.kellogg.nwu.edu/ mental faculty/balachan/htm/Acct439/Solutions/solution_manual19.docHilton, Ronald W Cost Management Strategies for Business Decisions,Second Edition marshall Accounting, What the Numbers Mean, Sixth Edition 3-8Turner, Robert M Ethics and professionalism the CPA in industry,April1990. Retrieved on December15, 2004 from http//www.nysscpa.org/cpajournal/old/08416230.htm