What is Cost In Accounting

Cost is the monetary value of an Asset or goods / merchandise manufactured or Purchased or held for resale purposes. It can be a cash amount or cash equivalent to get or acquire an asset. It includes all the costs incurred to ready an asset to use in the business or brings the products or goods in the place and condition required to get ready it for sale. For Example, when a machinery, which is a Fixed Asset, is acquired, costing Rs. 50000 it also includes the cost of wages Rs. 5000 that are needed to install it.

Similarly, for the cost of an Inventory, it includes costing price and all the necessary costs Freight Costs, Handing Costs, Import Duty, etc needed to carry the goods or products to the place of business, so that these are ready to sell. However, the cost of inventory does not include trade discounts, rebates, etc.