Evolution of Cost Accounting
Cost accounting seeks to establish the costs of each product produced or service provided by an organization through systematic recording and analysis of expenses. By knowing the costs of each product or service, the company’s management will be able to reduce costs, fix prices, and maximize profits.
Accounting has existed since the dawn of civilization. The process by which economic information is identified, measured, recorded, and communicated in terms of money. The utility of accounting information resides in its ability to reduce uncertainty. Relevant, verifiable, quantifiable and biased information must be presented.
Businesses were traditionally small and market exchanges between individuals and organizations characterized them before the industrial revolution. At that time, there was a need for accurate bookkeeping, but not so much cost accounting.