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"Cost accounting is the application of accounting and costing principles,
methods & techniques in the ascertainment of costs and the analysis of saving
and or exercises as completed with precious experience or with standard." -
I.C.M.A., London

To conclude, cost accounting is a discipline concerning cost identification, allocation,
analysis and presentation of cost information about different process, product or
activities for managerial decision making & control.

Basic accounting concept and principles

Accounting principles are the basic rules that are applied in reading transactions and
preparing financial statements. They are also known as accounting concept. These
rules are necessary to ensure that accounting records provide reliable information.
All businesses should apply the rules in their financial statements.

Business Entity Concept
Every business is regarded as having an existence separate from that of its owner.
This has already been recognized when an owner’s capital has been debited in the
business bank/cash account and credited to the owner’s capital account. The credit in
the capital account shows that the owner is a creditor of business, which owes him the
money. This can only be the case if the business is regarded as being separate from the
owner as no one can owe himself money. When the owner withdraws money from
the business, the amount is debited to his drawing account. The business account
does not show if he spends the money on personal expenses like clothes, foods, etc.
because these are not business expenses.
Money Measurement Concept

According to this concept, only transactions that can be expressed in monetary terms
are recorded in books of accounts. Goods, fixed assets, debtors, creditors, etc. may be
recorded in books of accounts because they have resulted from transactions that can
be expressed in monetary form. That’s why it is also termed as measurability concept.
Things which cannot be expressed in monetary terms are not recorded in accounts.
It is the reason that some of the people think it would be good if non-monetary items
such as skill of workers or dedications of employees, could be included in financial
statement.
Matching Concept

According to this concept, net profit/loss is different from revenue and expenses. If
the final accounts of a business are to give reliable information, the revenue and other
income should be matched with the expense in the period covered by the financial
statement. Trading and profit and loss account should be prepared on the accruals,

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