Cost accounting is an important tool in the management of any business firm or organization, which includes those in the small scaled industry. In the cause of our research instrument indicated the maintenance of improper and inadequate records coupled with the fact that cost methods used, through sometimes effective, were unconventional. For a small scale business to approach profit maximization level, it must be effective in cost control procedures and appropriate books of accounts must be set in place. Since many small scale businesses may not be able to afford the employment of qualified and skilled accountants, they can subscribe to the services of such professional through consultancy or part-time arrangement.
The growing concern of every business depends on how efficient and effective cost accounting is practiced. The principle of cost accounting is the provision of detailed information for planning, control and decision-making. In Nigeria the practice of cost accounting in small scale business is most time pick apart. The current state of cost accounting practice in the informal business in Nigeria appears inappropriate and therefore ineffectual. Costing system and the activities
or operations of the entities are in no way related. However, the guide provided by the costing system seems to be tentative and inaccurate for the aiming purpose. Preparation of exception reports and position statements are not considered necessary. Even when they are prepared, they are not produced at appropriate intervals and early enough to be valid Africa administrative studies, No 56, p. …to … cost accounting practice in the small scale industry of Nigeria regrettably enough, it is envisaged that this enigmatic and ugly situation is not going to be short-lived in spite of its attendant consequences. To shape a new directional focus that will ensure an efficient and effective cost accounting practice in Nigeria’s informal business sector it require immediate and concerted effort.
IMPORTANCE OF COST ACCOUNTING SYSTEM
An accounting system is a formal means of gathering and communicating data to aid and coordinate collective decisions in the light of overall goals or objectives of an organization. The accounting system is the major quantitative information system in almost every organization (Horngren and Sundem, 1987).
The cost accounting system is the link between planning and control in the decision-making cycle-part of the output is transferred to the input so that the Establishing
cycle is continuous and interacting (Ndukwe A. Ukpai, 2003).
PLANNING AND CONTROL CYCLE
An effective cost accounting system provides information for two broad
1. The accumulation of cost data for external reporting.
2. The collection of quantitative data for internal use by management in carrying out its function of planning, control, decision making and the formulation of overall policies.
Cost accounting system of an organisation is the foundation of the internal
financial information system.
Briggs (1972) realized the importance of cost accounting and stated that without a
system of cost accounts, it is doubtful whether a business of any seize can survive
in the intensely competitive competition condition of today, but it must be
emphasized that just like no two business are alike, even in the same industry, so
no ready-made system of cost account can be provided to suit each and every
business. The underlying principles, conventions and objects of all costing system
are the same, but the application of these principles and methods by which the
objects are to be achieved must vary with circumstances. A good cost accounting
system should aim at accomplishing the following purposes: 1. To reveal source of economies in production, having...