What is Accounting and Cost Accounting

 

Accounting

Accounting is an information science used to collect, classify, and manipulate financial data for organizations and individuals. 

Accounting is the recording of financial transactions plus storing, sorting, retrieving, summarizing, and presenting the information in various reports and analyses. Accounting is also a profession consisting of individuals having the formal education to carry out these tasks.

Cost Accounting

Cost Accounting is a phase of general accounting procedure by means of which details of cost of material, labor and overhead necessary to produce and sales of a article are recorded, summarized, analyzed and interpreted.

INTERNATIONAL ACCOUNTING Definition

INTERNATIONAL ACCOUNTING is the international aspects of accounting, including such matters as accounting principles and reporting practices in different countries and their classification; patterns of accounting development; international and regional harmonization, foreign currency translation; foreign exchange risk; international comparisons of consolidation accounting and inflation accounting; accounting in developing countries; accounting in communist countries; performance evaluation of foreign subsidiaries.

Concept And Meaning Of Internal Control Of Wage Payment

Concept And Meaning Of Internal Control Of Wage Payment

Wages are one of the major portion in the total cost of production. There is always a chance of fraud in wage payment. Therefore, an effective administrative and accounting control system must be implemented by the management to minimize fraud and to keep the labor cost minimum. As already stated, a number of departments are set up for the effective utilization of labor force and its proper accounting and controlling. These departments are required to work in a coordinated manner and to support the management in controlling labor cost by recording and reporting their activities on regular basis. The management should evaluate and revise its controlling system to find out leakages and to stop such leakages in time. Fraud in wage payment may result in various ways like inclusion of dummy worker in pay-roll, manipulating hours, recording extra overtime, using a wrong wage rate and registering absent workers.

Differences Between Piece Rate System And Time Rate System Of Wage Payment

Differences Between Piece Rate System And Time Rate System Of Wage Payment

1. Meaning

Piece rate system is a method of wage payment to workers based on the quantity of output they have produced. Time rate system is a method of wage payment to workers based on time spent by them for the production of output.

2. Nature Of Payment

Piece rate system pays the workers according to the units of output produced. Time rate system pays the workers according to the time spent in the factory.

3. Emphasis

Piece rate system gives emphasis on larger quantity of output. Time rate system emphasis on better quality of output.

4. Discrimination

Piece rate system discriminates the workers and pays more wages to efficient and skilled workers. Time rate system does not discriminate the workers and pays the same wages to efficient and inefficient workers.

5. Supervision

Piece rate system requires strict supervision to get the required quality output. Time rate system requires strict supervision to get required quantity of output.

6. Determination Of Labor Cost

Piece rate system helps to fix per unit labor cost in advance. Time rate system does not help to fix labor cost per unit in advance.

7. Flow Of Production

Piece rate system does not bring uniformity in the flow of production and causes an excessive wastage of inputs. Time rate system helps maintain a uniform flow of production and ensures an efficient use of materials, tools and equipments.

Concept And Meaning Of Time Rate System Of Wage Payment, Its Advantages And Disadvantages

Concept And Meaning Of Time Rate System Of Wage Payment, Its Advantages And Disadvantages

The time rate system is that system of wage payment in which the workers are paid on the basis of time spent by them in the factory. Under this system, the workers and employees are paid wages on the basis of the time they have worked rather than the volume of output they have produced. Hence, according to this system, wages are paid on hourly, weekly or monthly basis. Under time rate system, the wages earned by a worker is determined by using the following formula.

Wages Earned = Time spent (Attended) x Wage rate per hour/day/week/month

Advantages Of Time Rate System

The following are some of the important advantages of time rate system of wage payment:

• Time rate system is simple to understand and easy to calculate.
• Time rate system is quite useful for organizations that use costly inputs for quality outputs.
• Time rate system is beneficial for average and below workers.
• Time rate system assures regular income and creates the feeling of economic security among the workers.
• Time rate system does not discriminate the workers and is preferred by trade unions.

Disadvantages Of Time Rate System

The following are some notable disadvantages of time rate system of wage payment.

• Time rate system does not help in increasing output and improving efficiency as there is no correlation between effort and reward.
• Time rate system is not justifiable between efficient and inefficient workers and skilled and unskilled workers.
• Time rate system pays for idle time, which increases the cost of production.
  Time rate system encourages a g0-slow tendency among workers during working hours and encourages them to work overtime.
• It is difficult to estimate exact labor cost in advance.
• It requires strict supervision to get the required quantity of output.

Concept And Meaning Of Piece Rate System Of Wage Payment, Its Advantages And Disadvantages

Concept And Meaning Of Piece Rate System Of Wage Payment, Its Advantages And Disadvantages

The piece rate system is that system of wage payment in which the workers are paid on the basis of the units of output produced. Piece rate system does not consider the time spent by the workers. Piece rate system is the method of remunerating the workers according to the number of unit produced or job completed. It is also known as payment by result or output. Piece rate system pays wages at a fixed piece rate for each unit of output produced. The total wages earned by a worker is calculated by using the following formula.

Total Wages Earned = Total units of outputs produced x Wage rate per unit of output.

OR,

Total Wages Earned = Output x Piece Rate

Advantages Of Piece Rate System

The following are some important advantages of piece rate system of wage payment.

• Piece rate system pays wages according to the output produced by the workers. It encourages efficient workers.
• Piece rate system helps to reduce idle time.
• Piece rate system gives incentives to the workers to adopt a better method of production for increasing their production and earning.
• Piece rate system helps the management to determine the exact labor cost per unit for submitting quotation.
• Piece rate system reduces per unit cost of production due to increased volume of production.
• Piece rate system requires less supervision cost.

Disadvantages Of Piece Rate System

The following are the notable disadvantages of piece rate system

• Piece rate system does not help in producing quality output as the workers are concentrated more on quantity instead of quality.
• Piece rate system does not help for a uniform flow of production and makes difficult to regulate the production schedule.
• It is very difficult to fix an acceptable and reasonable piece rate for each item of output or job.
• Piece rate system adversely affect the workers' health as well.
• It requires extra supervision cost for quality output and effective use of materials, tools and equipment.