Application of Cost Accounting to Small Business


  It is axiomatic that continuous existence of all business concerns depends on the efficient and effective practice of cost and management accounting principles. The principal objective of cost accounting is the provision of detailed information for planning, control and decision making.
  In Nigeria, however, there is the recognition that the application and practice of cost and management accounting principle in the informal sector (to which small business belongs) is not without criticism. Small businesses seem to underestimate the powerful use or roles of these accounting principles in ensuring an effective and efficient day to day running of their businesses. Thus, there seems to be no relationship between the costing system and the activities or operations of the small businesses. Besides, the information provided by the costing system tends to be doubtful and inaccurate for the intended purpose. In most cases, preparation of exception reports and position are not considered necessary. But where they are prepared, they are not produced at appropriate intervals and early enough to be valid.
  Regrettably enough, it envisaged that this ugly situation could continue inspite of its attendant consequences unless entrepreneurs are made to understand the basic application of these accounting principles to their businesses. Hence, concerted efforts to shape a new directional focus that will ensure an efficient and effective cost and management accounting practice in the activities or operations of small business is urgently required. This is the essence of this group presentation.

  Need for a Cost and Management Accounting System: - An accounting system is a formal means of gathering and communicating data to aid co-ordinate collective decision in the light of overall goals or objectives of an organization. It is the major quantitative information system...