Which costs are excluded from cost accounting?

There are certain items which are excluded from cost accounting. These may be the following.

Cost Accounting - Theory & Problems| Maheshwari,S.N Mittal, S.N ...


  • Profit or losses arising on sale of fixed assets: Any profit or loss arising on sale or transfer of fixed assets are purely financial in nature and excluded from cost accounting.
  • Amortization of fictitious assets: These are the following intangible and fictitious assets only charged in financial accounting but find no place in cost accounting. Goodwill, patent, copy right, advertisement, preliminary expenses etc.
  • Appropriation of Profits: Certain portion of profits are appropriated for specific purposes. These are called appropriation of profits. It is not considered in cost accounting. These may be the following: donation and charities, Income Tax paid, Dividend paid, Transfer to general Reserve, Transfer to Capital Reserve etc.
  • Financial Incomes: There are certain incomes which are purely financial in nature and not included in cost accounting. These are the following: Rent Receivable, Share transfer fee received, Interest received on bank deposits, Dividend Received, Brokerage Received, Discount & commission Received etc.
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