Definition of Cost Accounting

Cost may be defined as the amount of cash equivalent or the fair value
of other consideration given to acquire an asset at the time of its acquisition or construction.

To the economists, cost is what must be given up in order to obtain something. Accountants, extending the perspective of economist, view cost as the value of economic resources used in the production of goods, services, income or profit. Accounting is a term desired from account and which is simply defined as an expression of transaction.

American Accounting Association (AAA) defines Accounting as the process of indentifying, measuring and communicating economic information to permit informed judgment and decisions by users of the information.

Financial accounting can be defined as the classification and recording of the monetary transactions of an entity with established concepts, principle accounting standards and legal requirements, balance sheets and cash flow statements during and at the end of an accounting period.

Cost Accounting (traditionally termed costing) may be defined as gathering of cost information and its attachment to cost objects, the establishment of budgets, standard costs and actual costs of operations, process, activities or products; and the analysis of variances profitability or the social use of funds.