Stanford Enterprises uses job-order costing. Which type of accounting does this method primarily relate to?

• A. Cost Accounting
• B. Financial Accounting
• C. Governmental Accounting
• D. Tax Accounting

Answer: (A)

Verified step by step guidance

1. Understand the concept of job-order costing: Job-order costing is a method used to allocate costs to specific jobs or projects, typically in industries where products or services are customized. This method tracks direct materials, direct labor, and overhead costs for each job.
2. Identify the primary purpose of job-order costing: The goal is to determine the cost of producing specific jobs or projects, which is essential for pricing, profitability analysis, and cost control.
3. Relate job-order costing to the broader field of accounting: Job-order costing is a subset of Cost Accounting, which focuses on tracking, analyzing, and controlling costs within an organization.
4. Differentiate Cost Accounting from other types of accounting: Financial Accounting deals with preparing financial statements for external stakeholders, Governmental Accounting focuses on public sector accounting, and Tax Accounting involves compliance with tax laws. Cost Accounting, on the other hand, is primarily concerned with internal cost management.
5. Conclude that job-order costing is most closely associated with Cost Accounting, as it is a method used to manage and analyze costs within an organization.