ABSTRACT
This chapter discusses separately the basic principles and practices relating to Chinese cost accounting and managerial accounting. Contrary to financial accounting, managerial accounting focuses on providing accounting information for the purposes of cost management and of assisting management to make adequate operating decisions. Classification of costs is a fundamental element in the Chinese cost accounting system. A set of principles of financial accounting basically are also applicable to cost accounting. In an environment of direct governmental regulation over accounting and business financing, cost accounting in business enterprises must follow the specific rules or procedures required by government authorities. The application of specific cost accounting methods is usually determined by an enterprise’s operational conditions, but filing the cost accounting methods employed with the overseeing government authorities is required. Cost accounting systems are established to perform product costing in a systematic way.
