Formation of Accounting Information on Costs

The article aims at clarifying the meaning and use of the terms ‘costs’ and ‘expenses’, and the procedure for their accounting. The meaning and use of the terms ‘costs’ and ‘expenses’ is explained. They are synonymous and are used in parallel. Information on costs is used for the calculation of product cost, and on expenses - to determine the financial results of the company’s activities. In these two cases, the amount of costs may differ. The company does not include all its expenses in the self-cost. At the same time, there may be production in progress at the beginning and at the end of the reporting period. To determine the financial results, the self-cost of products sold is taken. The products can be manufactured not only in the reporting period, but also in the previous period. Often there are cases where not all products manufactured in the reporting period are sold in the same period. The above situations determine the possibility of inconsistencies between the amount of expenses for the period and the self-cost of sales. It is found that in the process of capital turnover, costs occur at the stages of ‘supply’ and ‘production’, and expenses occur at the stage of ‘sales’.