The
Definition Of

Standard Cost Accounting System

A standard cost accounting system is a double-entry system of accounting. In this system, companies use standard costs in making entries, and they formally recognize variances in accounts. Companies may use a standard cost system with either job order or process costing.

In standard cost accounting system, companies journalize and post standard cost, and they maintain separate variance accounts in the ledger.

Share it:  Cite

More from this Section

  • Goodwill
    The largest intangible asset that appears on a company’s balance sheet is goodwill. Goodwill represents the value of all favorable attributes that relate to a company.
  • Income summary
    Income summary refers to a temporary account used in closing revenue and expense accounts. The resulting net income or net loss from this account will be transferred to owner’s capital.
  • Target net income
    Target net income is the income objective set by the management. It indicates the sales necessary to achieve a specified level of income.
  • Paid-in capital
    Paid-in capital is the total amount of cash and other assets paid in to the corporation by stockholders in exchange for capital stock.
  • Straight-line
    Under the straight-line method, companies expense the same amount of depreciation for each year of the asset’s useful life. It is measured solely by the passage of time.
  • Extraordinary items
    Extraordinary items are events and transactions that meet two conditions: They are (1) unusual in nature, and (2) infrequent in occurrence.
  • Last-in, First-out (LIFO)
    Last-in, First-out (LIFO) method is an inventory costing method that assumes the costs of the latest units purchased are the first to be allocated to cost of goods sold.