What is cost accounting? Definition and principles

Let's try to find out what self-financing is. This is a special economic category, which expresses relations in the field of distribution, production, consumption, exchange of products. Many aspiring entrepreneurs are trying to understand what self-financing is and how to use this economic term in their activities. In conditions of transition of the country's economy to the market option, this parameter is an important economic concept.

what is cost accounting

Features of cost accounting

This is a form of economic relations, material interest and responsibility between enterprises and the state, between the base company and its structural divisions, between enterprises, and also within the organization.

The implementation of cost accounting involves the rational management of the economy, the recoupment of the costs incurred, the implementation of a saving regime, and guaranteed profitability of the organization.

cost accounting conditions

The essence of economic calculation

It consists in a combination of means and mechanism, thanks to which the final result appears - full-fledged production management. It is the full self-financing based on commodity-money relations that guarantees the conformity of the resources of agricultural enterprises to the results of their direct activities. The system of such relations reflects the constant movement of resources, the resumption of the circulation of company funds. Arguing about what self-financing is, we note that it expresses production relations that develop on the basis of financial and material resources in companies of all forms of ownership.

self-financing of state enterprises

Self-financing scale

This term refers to the entire sphere of industrial relations, built on the basis of the terms: money, value, goods, cost, price, profit. The conditions of cost accounting are as follows: within the company, economic categories interact according to the laws existing in this area. It should be noted that the organization combines labor and means of production, and therefore the production process itself is carried out directly. The enterprise can include all the basic principles of cost accounting.

cost accounting translation

Features of agricultural organizations

The main development of cost accounting for such companies is determined by important principles:

  • self-financing and recoupment of costs incurred;
  • state regulation of the economy, as well as the self-government of the team;
  • the material interest of individual workers for the result of production;
  • control of the financial activities of the organization.

Self-financing involves covering all costs of the company at the expense of personal financial resources. The company's revenue from the sale of its products should be sufficient for the accumulation and consumption fund. The state has the right to regulate such market parameters as tax and interest rates, tariffs. By controlling their level, it gets the opportunity to create optimal conditions for the sale and production of goods.

full cost accounting

How to make cost effective

It will be effective if, in addition to the principles mentioned above, each member of the labor collective will qualitatively fulfill the duties that are assigned to him. If the employee does not have a personal material interest, there will be no talk of any efficiency. The company should create a special incentive system for employees. It includes a variety of bonuses, additional payments at the end of the year, financial assistance. Only with the relationship between labor productivity and decent pay, the employee will be interested in the result, and the company will be able to count on substantial profit.

Interesting Facts

In addition to material interest, such a factor as responsibility for spending financial resources is also important. Responsibility for the use of material assets should be provided. In reality, this principle involves the commensurability of costs with the results of economic activity at each stage of production. With constant control of the “ruble”, full self-financing of state enterprises is implemented.

cost accounting accounts

The importance of the financial and banking system for cost accounting

It is the financial authorities that constantly monitor the timely payment of taxes by state and private enterprises. The use of credit sanctions by banking institutions encourages corporate leaders to look for options for the effective use of all available resources. Such ways of influencing enterprises, such as repayment, targeted use of loans, urgency, allow banks to influence the circulation and manufacture of goods, timely identify and offer ways to eliminate losses of mismanagement, unproductive expenses, check accounts. Many companies are afraid of cost accounting, realizing that it has a lot of "pitfalls." This system is constantly being modernized, developed, keeps up with the changes occurring in the domestic and world economy. So what is cost accounting? This is a complex system in which all elements are interconnected.

Varieties of cost accounting

There is a subdivision of cost accounting in the form of organization into intraeconomic and general business. The first option involves economic relations with the state or other companies of individual farms. Intraeconomic calculation is associated with relationships in the enterprise itself, for example between separate departments. Among the current management methods, the leading positions belong to three calculation options: commercial, intra-company, and business.

Economic accounting today applies to enterprises that are wholly or more state-owned. Its task is to ensure the effective activities of the organization aimed at the full cost recovery, as well as dynamic development.

Commercial calculation operates at enterprises of all types of ownership, aimed at obtaining maximum material profit. Commercial entities can rely on government assistance, a cash loan or a transfer. Self-financing in this case depends on the volume of products, as well as the degree of independence (financial independence) of the company.

To reimburse the costs incurred, company owners are looking for ways to reduce financial, material, labor resources. A feature of this option of cost accounting is the provision of branches and departments operational independence.

Intercompany settlement has emerged as a kind of financial relationship within the company. Its task is to create a full-fledged, balanced activity of all departments of the company.

The interconnection of these three models is carried out through the economic mechanism.

cost accounting development

Elements of the cost accounting mechanism

These include the following components:

  • system of planning, incentive, responsibility;
  • a subsystem containing information, property, legal support;
  • subsystem, including cooperation, organization, specialization.


Self-financing provides a stable operating company with full reimbursement of costs incurred, stable profit. The company should receive such income that would fully cover production costs and have a good profit. The organization has a real opportunity for complete independence in its business activities. The company itself plans sales, production, hires employees, and manages property. Any self-supporting enterprise has its own bank account, a complete accounting system.

Each company has its own bank account, can receive loans from banks and other credit institutions. It also has an independent balance sheet and a complete accounting system. In case of improper performance by employees of their duties, liability is assumed . If the enterprise does not comply with the production plan, if its quality worsens, the production of defective products, the irrational use of equipment and material resources, the company’s incomes are significantly reduced. As a result, relations with customers, banks, and suppliers of raw materials deteriorate, problems arise with the payment of taxes and the payment of wages to employees. The results can be very disastrous for the company, from administrative fines to complete bankruptcy.

Source: https://habr.com/ru/post/A1043/

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