A Keynote On Financial Accounting And Costing Methods

As the term indicates, financial accounting deals with giving necessary financial information to external users like the labor unions, creditors, government authorities and even the shareholders or so. Mainly, it focusses on preparing the financial statements which include the profit and loss account, the balance sheet of the business organization that briefs the production results for a specific period of time. Also, the current financial status is also being upgraded at particular dates too. In the whole process, it follows the common principles of accounting and hence is accepted worldwide.

In general, financial accounting involves money handling and a set of financial statements are issued regarding the pre-specified period. Here are the various aspects being considered in financial accounting.

  • This type of accounting is truly historical in nature and it is a must to conduct annual reporting every year.
  • The cost of expense is generally evaluated without classifying them into fixed and variable types.
  • It provides cost information on jobs, department and other processes are calculated roughly. Along with this, the performance of workers and other managers are analyzed on a frequent basis.
  • The essential decisions like pricing of products, special orders are acknowledged to the management at the right time.

Know more about the costing method and its various types

Costing techniques are used to design the different costing needs of individual business organizations. Mainly, there are two types of costing and there exist other variants that are designed for specific purposes or various occasions or conditions.

The job costing

This technique is ideally designed for ascertaining the cost of a job or that of an order or the pack of finished products. In these cases, the cost unit is considered a job that involves the production of a particular quantity as per the received order only. The order here can be big or small depending on the customer’s wish which can be for stocking or for an eventual sale. One of the major variants of job costing can be explained below.

The contrast type of cost.

Such a method is exploited by contractors for construction purposes. For example, structuring up a bridge or so and in this specific case, the unit of cost is taken as a contract. The time given for completing the contract can normally vary from one or two years and some large projects can extend even up to many long financial years.  Do click here for more info.