Government Cost Accounting Standards – financial firm aid

There are a set of policies established by the government of the United States to help project the financial administration and accounting process of a firm. These processes are referred to as Government Cost Accounting Standards (GCAS).Government Cost Accounting Standards

Government Cost Accounting Standards refers to those approved accounting principles which is been uphold by the Cost Accounting Standards Board (CASB). The Government Cost Accounting Standards (GCAS) are contained in the secluded document numbered;


  • 48 CFR 9905.501
  • 502,
  • 505
  • 506

These articles on cost accounting were for some reasons included in the latest revised and improved cost principles. This could be found in the Uniform Guidance in the 2 CFR 200 which is at Part 200.419.

Government cost accounting standards consider a lot of government policies that try to affect workings in the accounting system. Administrative sections such as cost, and aid to management.

Government Cost accounting Standards As An Aid To Management

Resources are limited and should be maximized in every production process. Cost accounting standards present the tools that help management to control these resources and mitigate loss. Also, it helps to determine the right cost of a product or service.
It can easily be established that cost accounting standards help in the proper management of limited resources available to the government. However, even though that manufacturers nowadays are realizing the willingness to accept as a principle that costing is of value to their business. There can still be a considerable lack of appreciation by many of them as to where its value lies.
It is also the responsibility of the cost accounting standards board to figure out the costing enabling a business not to find out what various jobs or processes have cost. But also should have a cost.

This includes where losses and waste are occurring before the work is finished. And therefore, immediate action is taken. If possible to avoid such a loss or waste.

Business policies are required to follow the government cost accounting standards since it may require the consideration of alternative methods. And procedure and this is fascinated by the cost information correctly presented.

For instance, by the aid of cost reports, management could decide whether the manufacturer of certain products increases over-heads expenditure, disproportionately, whether to treat by-products, even if at a loss. To make possible a more important trade-in of another product.

Whether the plant and machinery could be used more advantageously by concentrating on particular products to the exclusion of less profitable ones or whether prices could or should be adjusted.

Purposes Of Cost Accounting (Government Cost Accounting Standards)

  • The first is to assist the management in all ramifications, through the adequate provision of the relevant information by which the management takes a decision.
  • Secondly, to help serve as a grade towards fixing of prices of good as well as products or services.
  • Thirdly, to assist in setting standards of performance and adequate provision of information for control purposes. To help to determine the unit cost of products, job, process, operation, or department by close analysis of all expenditures.
  • Fourthly, to help provide a comparative statement of cost in which the cost of the current period is compared with the cost of a previous period or more vitality with the budgeted cost.
  • Also, management can identify inefficiencies and waste as may be revealed.
  • Next, to help in the determination of cost stalk of materials carried in the financial statement.
  • To help in the easy preparation of feasibility studies of new projects by assembling out all the element budgets.
  • Also, to help get enabling information that can either reject or accept an order.
  • Furthermore,

  • to help determine the level of quantity of the products that should be produced and sold.
  • Also, to help also determine how an increase in workers’ wages or salaries will affect productivity and profitability of the going concerns.
  • To assist in the generation of data for use in order to increase determination.
  • Finally, to assist in the explanation of the sources of profit or loss revealed in the profit or loss account.

Differences Between Cost Accounting And Financial Accounting

The standard cost accounting procedure cannot be separated for the approved government cost accounting standards. However, both financial accounting, cost accounting, taxation accounting, auditing are said to be management accounting due to the fact that all of these are geared towards assisting the management in all ramification and they function as information giver.
That is to say, that the management uses these accounting standards to make managerial decisions.


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