ABSTRACT
E xplanatory note: The concepts set forth in this statement are not standards for the cost accounting procedures of recording historical cost. They represent concepts of the costs most useful to management for planning and control decisions. It is to be expected that in practical application, various techniques, procedures, and rules will be developed, of which historical cost recording is but one, to provide data representative of the costs suggested by these concepts. Often the representations of the basic costs will be rough approximations of varying degrees of reliability. The basic concepts of cost described in this statement serve two functions: First, they indicate desired measures of cost and thus serve as a basis for judging the reliability of any cost data provided to management for planning and control decisions. Second, they serve as an inducement to the development of improved techniques and procedures for supplying appropriate cost information to management.
