tailieunhanh - Lecture Fundamentals of cost accounting - Chapter 2: Cost concepts and behavior
Chapter 2 covers cost concepts and behavior. You want to be certain that you have a thorough understanding of these concepts before going forward. Understanding of the concepts in Chapter 2 is critical for success in this course. | Cost Concepts and Behavior Chapter 2 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 2 covers cost concepts and behavior. You want to be certain that you have a thorough understanding of these concepts before going forward. Understanding of the concepts in Chapter 2 is critical for success in this course. What is a Cost? Cost is a sacrifice of resources. . 1 Explain the basic concept of “cost.” 2 - Let’s start with the basic concept of cost. A cost is a sacrifice of resources. When we buy one thing, we give up (sacrifice) the ability to use these resources, for example cash, to buy something else. Cost versus Expenses Cost Outlay Cost Past, present, or future cash outflow Expense Cost charged against revenue in an accounting period LO1 2 - A cost can be an outlay cost, that is, a past, present, or future outflow of cash, or it can be an opportunity cost. An opportunity cost does not require an outlay of cash, but rather represents the foregone benefit from the best alternative course of action. Because an outlay cost represents an outflow of cash, it will ultimately end up on your financial statements. On the other hand, an opportunity cost will never show up on your financial statements. Are cost and expense the same thing? No. A cost is a sacrifice of resources. An expense, on the other hand, is a cost that is charged against revenue in a accounting period. Can you identify a cost that is never an expense? Remember, an expense shows up on your income statement. An outlay cost, an outflow of cash, that is never an expense, is the purchase of land. Presentation of Costs in Financial Statements . 2 Explain how costs are presented in financial statements. Income Statements Service company Revenues – Cost of services sold = Gross margin – Marketing and administrative costs = Operating profit The excess of operating revenue over costs necessary to generate those revenues Cost of billable hours | Cost Concepts and Behavior Chapter 2 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 2 covers cost concepts and behavior. You want to be certain that you have a thorough understanding of these concepts before going forward. Understanding of the concepts in Chapter 2 is critical for success in this course. What is a Cost? Cost is a sacrifice of resources. . 1 Explain the basic concept of “cost.” 2 - Let’s start with the basic concept of cost. A cost is a sacrifice of resources. When we buy one thing, we give up (sacrifice) the ability to use these resources, for example cash, to buy something else. Cost versus Expenses Cost Outlay Cost Past, present, or future cash outflow Expense Cost charged against revenue in an accounting period LO1 2 - A cost can be an outlay cost, that is, a past, present, or future outflow of cash, or it can be an opportunity cost. An opportunity cost does not require an outlay of cash, but .
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