Quiz 17: New Approaches to Cost Accounting

Business

Cost accounting: Cost accounting is the process of recording the entire cost incurred in the business in order to advice management to improve their efficiency. Cost accounting has been drastically changed to make it more relevant and effective as it become out dated and need to be revised. Such movement is much needed for health organizations. Health firm has started to move toward the better cost accounting process. It is required to state the major concern in cost accounting which results in the reexamination of whole cost accounting. Cost accounting has evolved as a very important tool to generate the external data for financial results instead for managing the organizations. It also provides the information to help the manager in running the process effectively. Thus, it can be concluded that creation of external report has caused to revise the entire cost accounting.

Cost accounting is the process of recording the entire cost incurred in the business in order to advice management to improve their efficiency. Cost accounting has been drastically changed to make it more relevant and effective as it become out dated and need to be revised. Such movement is much needed for health organizations. Health firm has started to move toward the better cost accounting process. It is required to state that if the changes in cost accounting are relevant to health care organization. Heath care industries are affected by the cost accounting as that has been revolved around the Medicare Cost report. The beginning of (DRG) diagnosis related ground was an alarm to many hospitals. There are various reasons that change in cost accounting are relevant to HCO and the reasons are as: 1. Earlier Health care organizations (HCO) really didn't have any idea about the appropriate cost which is incurred by it to treat different types of patient and cost accounting plays a vital role in gathering the much needed information's in order to determine the correct information about the cost incurred on each patients. The essence to develop the cost accounting method to generate the important information for internal manager and determine the right cost. 2. Other reason is that in order to negotiate any contract managers are required to have accurate measures of cost incurred while serving different patients. Thus, it can be concluded that change of cost accounting is relevant for health care organizations.

Traditional cost accounting is known for following the old method to prepare the report and data. It has some crucial field where traditional cost accounting is not up to the mark in generating the report and helps the manager in job operations. As it become out dated needs are to be revised to make it more relevant and effective. Movement is much needed for health organizations and health firm has started to move toward the better cost accounting process. Re-examining of traditional cost accounting is very important to generate the data of external finance and provide the information to help the manager in running the process effectively. Inability of traditional costing system to reflect accurate profits is other reason to reexamine it. Thus, it can be concluded that failure to provide good measurement of profits and information to managers causes reexaminations of traditional examinations.