KASNEB PASTPAPERS · CPA STUDY MATERIALS Management Accounting — Nature, Purpose and Classification of Costs — PREVIEW Course: CPA — Certified Public Accountant | Level: Foundation Level 2 This is a free preview covering the introduction and Section 1 only. Contents (full paper) 1. What is cost accounting? — included in this preview 2. What is management accounting? — full version only 3. Objectives of cost accounting — full version only 4. Functions of a cost accountant — full version only 5. Installing a costing system — full version only 6. Scope of cost accounting — full version only 7. Scope, uses and limitations of management accounting — full version only 8. Financial accounting vs cost accounting — full version only 9. Cost accounting vs management accounting — full version only 10. Essentials of an ideal costing system — full version only 11. Cost classification by element — full version only 12. Cost classification by function — full version only 13. Cost classification by behaviour — full version only 14. Other classifications used in decision-making and control — full version only 15. Full worked question — prime cost, conversion cost and unit cost — full version only 16. Self-assessment question bank, 10 original questions with model answers — full version only 17. Exam technique and revision checklist — full version only 1. What is cost accounting? Cost is the value of resources given up or sacrificed to achieve a specific objective — making a unit of product, running a department, or completing a job. Cost accounting is the branch of accounting concerned with recording, classifying, and reporting cost information so that management can plan, control, and make decisions. Unlike financial accounting, which looks backward and reports to outsiders, cost accounting is built for insiders and looks both backward (what did it cost?) and forward (what should it cost?). Four activities sit at the core of cost accounting, in any organisation — manufacturing or service, profit or non-profit: Recording — capturing and classifying cost data as it is incurred. Ascertaining/estimating — working out the cost of a specific product, service, job, or department. Planning — setting cost and profit targets, usually expressed as budgets. Controlling — comparing actual costs against the plan, investigating variances, and correcting what went wrong. Unlock the full paper The complete version covers the meaning and limitations of management accounting, the functions of a cost accountant, the scope of cost accounting, the differences between financial, cost and management accounting, all major cost classifications (by element, function, behaviour and controllability), a fully worked prime-cost/conversion-cost question, and a 10- question original self-assessment kit with model answers. Purchase the full paper to continue.