Cost Accounting Cycle

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on February 27, 2023

The cost accounting cycle embraces activities connected with verification and preparation of source documents, their journalizing, and their posting to control accounts and subsidiary ledgers.

The cycle continues with the closing of accounts and presenting results of operations of the accounting period in the form of the income statement.

Period Covered by Cost Accounting Cycle

An accounting period is the window of time covered by an income statement.

Generally, a company's cost accounting department will prepare income statements on a monthly basis. As the length of a month varies from 28 days to 31 days, cost accountants sometimes divide the year into 13 equal periods of 4 weeks.

This helps to make income statements and other reports more comparable.

It is common to take one month as the accounting period to demonstrate the cost accounting cycle.

Control Accounts Used in Cost Accounting Cycle

The control accounts used in the cost accounting cycle are:

Cost Accounting Cycle FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.