<\/span><\/h2>\nCost accounting is the process of collecting, recording, classifying and summarizing expenses incurred in the production and business activities of an enterprise, in accordance with current accounting regulations. This accounting helps to fully and accurately reflect costs to:<\/span><\/p>\n\nCalculate the cost of products and services<\/span><\/li>\nBusiness performance evaluation<\/span><\/li>\n<\/ul>\nHere are some basic concepts related to cost accounting, which are useful if you are preparing training materials, writing an accounting blog, or clarifying financial management processes:<\/span><\/p>\n\nCost: <\/b>Is the total amount of resource expenditure (money, raw materials, labor, services, etc.) that a business spends to achieve a specific goal (product production, service provision, sales activities, management, etc.).<\/span><\/li>\n<\/ul>\n\nCost Classification:<\/b><\/li>\n<\/ul>\n By constituent elements: raw material costs, labor costs, outsourced service costs, etc.<\/p>\n
By function: production costs, sales costs, business management costs<\/span><\/p>\nAccording to the relationship with output: fixed costs, variable costs, mixed costs<\/span><\/p>\n\nCost of Goods Sold (COGS): <\/b>Is the total direct cost of producing a product or completing a service. Cost is the final result of the production cost accounting process.<\/span><\/li>\n<\/ul>\n\nCost norms: <\/b>Is a standard cost level established for a unit of product\/service to serve the purpose of control and comparison with actual costs.<\/li>\n<\/ul>\n\nDirect and indirect costs<\/b><\/li>\n<\/ul>\n Direct costs<\/b>: Directly associated with a product, service, or project (such as raw materials, direct labor)<\/span><\/p>\nIndirect costs<\/b>: Cannot be directly attributed, need to be allocated (such as electricity, machine maintenance, ...)<\/span><\/p>\n\nAccounting price:<\/b> Product and material prices are calculated by the business. (Contact: Product prices include expenses).<\/span><\/li>\nAccounting voucher:<\/b> A form that records details of transactions (including expense transactions).<\/span><\/li>\nAccounting date:<\/b> Date of recording, statistics and calculation of cost transactions.<\/span><\/li>\n<\/ul>\nCost accounting involves the process of collecting, recording, classifying and summarizing expenses incurred.<\/figcaption><\/figure>\n<\/span>Classification of basic accounting types<\/b><\/span><\/h2>\nBelow is a classification of basic accounting types, divided by operations - statistics - accounting, to help you understand the role and method of recording economic - financial information in the enterprise:<\/span><\/p>\n\n\n\nAccounting type<\/b><\/td>\n Concept<\/b><\/td>\n Characteristic<\/b><\/td>\n For example<\/b><\/td>\n<\/tr>\n\nOperational Accounting \/ Operational Recording<\/span><\/td>\n It is a form of primary, regular, quick accounting that directly records economic and technical operations during production and business activities.<\/span><\/td>\n Continuous, daily recording<\/span><\/p>\n <\/p>\n
No absolute accuracy required<\/span><\/p>\n <\/p>\n
Serve quick management, such as tracking raw materials, output, labor, etc.<\/span><\/td>\n
Track daily inventory, worker hours, volume of raw materials used, etc.<\/span><\/td>\n<\/tr>\n\nStatistical Accounting \/ Statistics Recording<\/span><\/td>\n It is a form of collecting, processing, and analyzing quantitative and qualitative indicators of socio-economic phenomena arising on a large scale in a certain period.<\/span><\/td>\n Recorded by synthesis and analysis<\/span><\/p>\n <\/p>\n
Use average, ratio, chart tools<\/span><\/p>\n <\/p>\n
Serves trend analysis, performance evaluation, macro decision making<\/span><\/td>\n
Labor productivity statistics, average material consumption, cost-to-revenue ratio, consumption trends by industry...<\/span><\/td>\n<\/tr>\n\n Financial & Managerial Accounting<\/span><\/td>\n It is a system for collecting, processing and providing financial and economic information in currency, according to accounting standards, serving financial reporting and business management.<\/span><\/td>\n Financial accounting: Record and reflect transactions that affect assets, liabilities, capital, revenue, and expenses.<\/span> \u2192 Serving external parties: shareholders, banks, tax authorities...<\/span> <\/p>\nManagerial accounting: Cost analysis, budgeting, pricing to support internal management and operations.<\/span> \u2192 Serve leaders and department heads.<\/span><\/td>\n
Financial accounting: Recording sales revenue, shipping costs, asset depreciation<\/span><\/p>\n <\/p>\n
Management accounting: Monthly production cost planning, break-even point analysis, etc.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/span>What are the characteristics of cost accounting?<\/b><\/span><\/h2>\nBelow are the basic characteristics of cost accounting in business - extremely important to understand the correct role, implementation and application in financial management:<\/span><\/p>\n\u00a0Mandatory and compliant with accounting standards<\/b><\/p>\n\nCost accounting must comply with current accounting principles and regimes issued by the Ministry of Finance (for example: Circular 200\/2014\/TT-BTC or Circular 133\/2016\/TT-BTC).<\/span><\/li>\nThis is a mandatory activity for all businesses, to ensure transparency, accuracy and legality.<\/span><\/li>\n<\/ul>\nExpenses are recorded on an accrual basis.<\/b><\/p>\n\nThis means that costs are recorded when they are incurred, regardless of when the money is actually spent.<\/li>\n For example, when a business receives advertising services in April, the expense is recorded in April, even though it is paid in May.<\/span><\/li>\n<\/ul>\nRecorded in currency<\/b><\/p>\n\nAlthough costs may arise from materials, labor or services, when accounting, all are converted and recorded in monetary value (VND or accepted foreign currency).<\/li>\n<\/ul>\nCosts are classified according to several criteria for analysis purposes:<\/b><\/p>\n\nBy element: raw materials, labor, depreciation, outsourced services, other costs<\/span><\/li>\nBy purpose of use: production costs, sales costs, management costs<\/span><\/li>\nBy nature: fixed costs, variable costs, direct costs, indirect costs<\/span><\/li>\n<\/ul>\nIs the basis for cost calculation, budget control and decision making.<\/b><\/p>\n\nCost accounting helps determine the cost of products and services, serving the purpose of building selling prices and profit planning.<\/li>\n Helps managers track actual costs against budget, make decisions to adjust or optimize cash flow.<\/li>\n<\/ul>\nRequire valid documents to ensure legality<\/b><\/p>\n\nAll expenses when accounting must have full and valid accounting documents: invoices, payment vouchers, contracts, handover and liquidation minutes, etc.This ensures that costs are accepted when settling taxes, avoiding audit risks.<\/li>\n<\/ul>\n<\/span>Accounting method<\/b><\/span><\/h2>\nCost accounting is the way businesses record, classify and track production and business costs. Choosing the right method will help businesses calculate costs accurately and control costs more effectively. Below are the common methods:<\/span><\/p>\n\n\n\nMethod<\/span><\/td>\n Characteristic<\/span><\/td>\n Advantage<\/span><\/td>\n Disadvantages<\/span><\/td>\n<\/tr>\n\nDirect costing method<\/span><\/td>\n Only include variable costs (costs that vary with output) in product cost.<\/span>Fixed costs are not allocated to products but recorded separately in the period.<\/span><\/td>\n Easy to control costs according to output fluctuations.<\/span><\/p>\n <\/p>\n
Suitable for businesses that need to analyze profits by product line.<\/span><\/td>\n
Does not fully reflect actual costs, especially fixed costs.<\/span><\/td>\n<\/tr>\n\nFull costing\/Absorption costing<\/span><\/td>\n Include both fixed and variable costs in product cost.<\/span><\/td>\n Indicate full cost \u2013 required for selling price determination.<\/span>Used in standard financial reporting.<\/span><\/td>\n It is difficult to determine the real profit per product if the fixed costs are large.<\/span>\nStandard costing<\/span><\/td>\n Apply cost norms (materials, labor, production costs) to calculate the cost, then compare with reality.<\/span> Helps businesses control costs and analyze variances easily.<\/span><\/p>\n <\/p>\n
Very suitable for mass production, processing industry.<\/span>
If the deviation is large, it may cause errors in the report.<\/span><\/td>\n<\/tr>\n\nJob order costing<\/span><\/td>\n If the deviation is large, it may cause errors in the report.<\/span><\/td>\n Very suitable for businesses that work on orders and do not produce in bulk (printing, interior design, construction, etc.).<\/span> It is time consuming to track each order separately.<\/span><\/p>\n <\/td>\n<\/tr>\n
\nProcess costing<\/span><\/td>\n For continuous production, repetitive processes (eg food, chemicals).<\/span>Calculate average cost by production stage.<\/span><\/td>\n Suitable for mass production, helps simplify accounting.<\/span><\/p>\n <\/td>\n
No details on individual products.<\/span><\/p>\n <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
<\/p>\n
<\/span>Basic steps to cost accounting\u00a0<\/b><\/span><\/h2>\nBelow are 6 basic steps to cost accounting in business - applicable to most types of business, especially important for financial accounting and management accounting:<\/span><\/p>\n\nCollect expense documents:<\/b> Purchase invoices, pay slips, service bills, etc.<\/span><\/li>\nIdentify cost objects:<\/b> Costs related to which product, department, or activity.<\/span><\/li>\nIdentify the relevant expense accounts:<\/b> Use the accounting system to record expenses.<\/span><\/li>\nRecord expenses in accounting books:<\/b> Use accounting software or manual bookkeeping.<\/span><\/li>\nCost classification and synthesis:<\/b> By cost element, cost item, cost department.<\/span><\/li>\nPrepare expense report:<\/b> Cost sheet, production cost report, etc.<\/span><\/li>\nCost analysis:<\/b> Compare actual costs with plans, find out the causes of cost fluctuations.<\/span><\/li>\n<\/ul>\n6 basic steps to cost accounting in business<\/figcaption><\/figure>\n<\/span>Why do businesses need to perform cost accounting?<\/b><\/span><\/h2>\nIf you are working for a small business, startup, or scale up, starting to do proper accounting as soon as possible will help save a lot of risks and costs later. Businesses need to do cost accounting for the following extremely important reasons:<\/span><\/p>\nEffective cost control<\/b><\/p>\n\nHelps businesses know what money has been spent on, where it is wasted, and from there have a basis for reduction and optimization.<\/span><\/li>\nAvoid overspending and uncontrolled budget.<\/span><\/li>\n<\/ul>\nMake accurate business decisions<\/b><\/p>\n\nWhen knowing clearly the costs of production - operation - marketing..., businesses can calculate: Product cost, Profit, Break-even point.<\/span><\/li>\nFrom there, make decisions such as: whether to increase prices, cut any parts, invest more in where...<\/span><\/li>\n<\/ul>\nFinancial planning \u2013 budget forecasting<\/b><\/p>\n\nCost accounting is important input data for building: Annual\/quarterly financial plans, Product investment and development plans, Cash flow management<\/span><\/li>\n<\/ul>\nBusinesses need to perform cost accounting if they want to control effectively.<\/figcaption><\/figure>\nCalculate the correct cost of products\/services<\/b><\/p>\n\nIf costs are not properly and sufficiently accounted for, businesses can easily: Sell at a loss without knowing it, and price incorrectly, causing products to lose competitiveness.<\/span><\/li>\n<\/ul>\nMeet legal and tax requirements<\/b><\/p>\n\nPrepare financial statements in accordance with regulations<\/span><\/li>\nCalculate and declare taxes accurately<\/span><\/li>\nAvoid legal risks and tax penalties due to errors or fraud<\/span><\/li>\n<\/ul>\nIncrease transparency and professionalism<\/b><\/p>\n