Cost Accounting source documents
As we know, Major part of cost accounting source documents generally originates outside the accounting function. In addition to invoices and documents which supporting the transactions of materials bought, disbursed, or relocated between departments, the accountant necessitates reports of time studies, records of workers’ actual time, BOM (bills of material), and lists of operating and planning schedules.
Cost Accounting source documents also includes Capacity studies, machine-tool requirements, and statistics regarding floor space, machine capacities, and power assessments or power consumption establish additional source of records required.
The accountant’s Dependency upon information provided by outsiders requires source information that are accurate, reliable, and available at the right time. The accountant evaluates and uses such data in a way that will channel out indispensable facts for management. Since these cost information depend upon appropriate, correct, and timely information from all levels of the organization, cost accounting becomes a cooperative undertaking involving all departments of the company.
It is an educational problem of executive management, the controller, and the controller’s staff to make all employees cost sensible. Employees must be trained to see and execute costing techniques to promote cost control. Cost Accounting source documents should be analyzed properly in order to arrive a true cost.
Since Cost Accounting source documents are mostly analytical, a legal department also required to see law related issues there under.The legal division finds cost accounting supportive in keeping various affairs of the company in conformity with the law and regulation.
The Industrial law and labors Law, terms of industry wide trade union contracts, the Robinson-Patman Act, social security taxes, unemployment compensation taxes, as well as income taxes, are some of the areas where the legal and cost departments need to cooperate.