What are the characteristics and classifications of cost accounting information and costs?

Here are the answers to the questions:

1. A quality of good cost accounting information is the ability to

• A. adapt to changing needs.
  • Explanation: Good cost accounting information must be flexible and relevant, capable of adapting to the evolving requirements of management for planning and decision-making.

2. The distinction between cost accounting and financial accounting is by preparing cost account

• C. as and when projects are completed.
  • Explanation: Cost accounting provides information for internal management decisions and can be prepared on an as-needed basis, such as upon completion of projects, unlike financial accounting which is typically prepared periodically (e.g., annually) for external stakeholders and statutory compliance.

3. Cost accounting information is useful for decision making if it is

• C. presented on time.
  • Explanation: For information to be valuable for decision-making, it must be timely. Even accurate information loses its utility if it is not available when decisions need to be made.

4. Cost incurred in running a business and cannot be recovered is

• B. sunk cost.
  • Explanation: A sunk cost is a cost that has already been incurred and cannot be recovered through any future action. It is irrelevant for future decision-making.

5. Cost is classified as prime cost when it

• A. is direct production cost.
  • Explanation: Prime cost consists of direct materials and direct labour, which are the costs directly attributable to the production of a product or service.