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Question: why is interest on loan not included in cost sheet ?

Answer: Hi Interest on loan will not be considered in cost sheet as it is financial expenditure form part of does not relate to production

Category Cost Accounting Interview Questions & Answers - Exam Mode / Learning Mode
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Question: why is interest on loan not included in cost sheet ?

Hi Interest on loan will not be considered in cost sheet as it is financial expenditure form part of does not relate to production Source:

Answered by: mallikarjuna | Date: 2/3/2009 | Contact mallikarjuna Contact mallikarjuna

interest on loan is not related with production Source:

Answered by: sumantra | Date: 4/20/2009 | Contact sumantra Contact sumantra

because interest is purely related to financial accounts. It is not the part of cost accounts Source:

Answered by: sujatha | Date: 5/18/2009 | Contact sujatha Contact sujatha

Interest on loan comes under Final Accounts beaz cost accounting deals with production and manufacturing. Source:

Answered by: Rupa . A | Date: 6/4/2009 | Contact Rupa . A Contact Rupa . A

Cost accounts present the cost associated with production and operations, alogwith operational overheads, but the financing costs are not attributable towards normal operations, and these pertain purely to the financing decisions taken by the management, and should not be part of the cost sheet for the sake of preserving the comparability of the reports. Source:

Answered by: Jag | Date: 6/16/2009 | Contact Jag Contact Jag

interest on loan is not included in cost sheet because it is treated as an item of finance. in cost sheet items of financil nature are not included. Source:

Answered by: ruchi | Date: 6/22/2009 | Contact ruchi Contact ruchi

Interest on loan is a financial charge and debited to Profit & Loss account. On the other, Cost sheet is statement of cost of product/service at the determined period of time Source:

Answered by: Mukesh | Date: 8/10/2009 | Contact Mukesh Contact Mukesh

Interest on loan is not included in costing.This is because if we consider cost of funds from outsiders used for production as a component of product cost, we should also consider a notional interest on the owner's funds . But considering notional interest costs will increase the product costs unnecessarily making it incompetent.
So its better to exclude the interest costs from the cost accounting but consider it while making production decisions. Source:

Answered by: Shubhi | Date: 10/27/2009 | Contact Shubhi Contact Shubhi

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