TRACEABILITY, COST Definition

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TRACEABILITY, COST is where businesses rely on linking or tracing costs to outputs; managerial or cost accounting provides managers this information. Management accountants strive to establish causal relationships between costs and cost objects to determine why costs were incurred. The process of tracing costs to cost objects forges a necessary link so that ultimately costs can be traced to outputs, even if at an aggregated level to their main categories: Direct Costs, Indirect Costs, and General and Administrative Costs.

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ACTUAL COST is the amount paid for an asset; not its retail value, market value or insurance value.

OBLIGATE is to cause to be indebted or grateful. To de-obligate would be to enable the debt to be forgiven or expunged.

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