Traditional And New Methods Of Accounting - 1923 Words

Traditional and new methods Accounting is a ‘traditional science’ which is considered as the key to keep all payments and receipts as well as that of expenditures and incomes being recorded (The Institute of Cost Accountants of India, 2012). Cost accounting is one of the categories besides financial accounting and management accounting. It all aims to support the businesses with financial reporting requirements and also give valuable data for taking different choices furthermore in terms of controlling cost and analysing profitability. There are two cost accounting systems that can be applied with the differences lie in its approach, methodology and scopes (Scheid, 2009). Absorption costing or full costing is a method of sharing overheads between a number of different products or services on a fair basis. This costing method allocates costs to product units and just has single rate that is being utilised to allocate company’s manufacturing overhead rates. It is most likely to use the method if there is only a single originating factor. On the other hand, Activity-based costing which commonly called ABC system is defined as â€Å"an approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs† (CIMA, 2005). It distinguishes activity centres and allocates the costs taking into account the amount of each product which need to be produced. As it was mentioned, the absorption method only designates for product costs, it isShow MoreRelatedLean Accounting1428 Words   |  6 PagesQ1: Do the traditional accounting practices that the Topeka plant adopted in 1979 to support its mass pr oduction process have value in a lean environment? Explain the specific reasons that support your answer. In general, we do not think that traditional accounting practices that Topeka plant adopted in 1979 to support its mass production would fit into the lean accounting environment. 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In thisRead MoreLean Accounting Essay1508 Words   |  7 Pagesthe main benefits and challenges of implementing a lean accounting system in a lean manufacturing environment? Do you anticipate interest in lean accounting will grow, the methods will change, or the concepts will fade out and be replaced with another ‘flavor of the month’? How do you perceive lean principles affecting your career? Justify your answers. I. Lean Accounting Lean accounting often refers to more simplified accounting practices that focuses on eliminating waste, reducing