horngren’s cost accounting epub

horngren’s cost accounting epub

The Evolution and Impact of Horngren’s Cost Accounting in Modern Business Practices

1. Introduction to Horngren’s Cost Accounting

Well over 500 colleges and universities have adopted Horngren’s Cost Accounting and corporations, governmental agencies, and non-profit organizations, both in the United States and other countries appreciate the text. Consider the following comment provided by one of Horngren’s users in Canada: “Congratulations on your Cost Accounting textbook written by Horngren. We are one of many educational institutions using an International version of your Cost Accounting text. Your text is to be highly commended for the simple, clear and concise manner in which the subject matter is focused and communicated. The numerous updated examples from real-world organizations are extremely effective in delivering a clear application of the various concepts.”

For every decision that is made, cost accounting information is essential. Horngren’s Cost Accounting defined the cost accounting market and continues to innovate today by consistently integrating the most current practice and theory into the text. For over three decades, the text has helped change the way best students think about accounting – from simply understanding financial accounting as often historical and irrelevant for future decisions, to a more contemporary, decision-making perspective. Horngren’s Cost Accounting has been instrumental in the increased recognition of the role of cost accounting in helping managers make informed decisions.

2. Key Concepts and Principles in Horngren’s Approach

While this model has been developed in the context of the United States, the results provide evidence for cost accounting educators in similar countries. Additionally, as the United States is a significant influence on the countries that apply best private sector business practice, the Horngren’s model is highly insightful for educators in other parts of the world. Despite substantial differences in educational curricula, delivery, learning outcomes, and assessment between the subjects, some instructors aggrievedly believe that students have a deplorable knowledge of cost accounting without understanding the significant differences in academic preparation process. Horngren’s model has built heavily on the so-called neoclassical economic model in which individuals behave rationally. Such a model takes little notice of sociological, psychological, and other issues, resulting in criticism from numerous quarters.

The Horngren’s model was a major departure from traditional cost accounting that builds on Maslow’s theory by extending his idea of the human being seeking satisfaction to a cost accounting framework. In the Horngren’s model, the human being is seen as pursuing various goals or activities in search for satisfaction, and cost accounting provides data on the resources used to finance these activities. Thus, in Horngren’s approach, the aim is to equip students with tools they need to understand these different activities and provide estimates of the resources required for their finance. It is from these activities that the ‘inventory’ or statements of financial position are constructed.

3. Application and Case Studies in Various Industries

The case studies in cost accounting in this book have a wide variety of applications and, because they have been tested previously in other volumes of Horngren, can be used by instructors with confidence. The explorations are an important part of the book, as they bring insight into concepts studied and also improve the communication skills of the students. Statistical modeling and Decision Science evaluations and exercises add additional strength to the Horngren product. With the 11th Edition, we will have been using the basic content of the book for a period of 39 years. During this time, we have received and evaluated a substantial number of suggestions. On this basis, we have made changes and revisions in response to these suggestions in order to provide the highest quality of relevant materials that are adaptable to all institutions. We feel we have made significant advances during this time, changes that have been well received. We lend our warm thanks to all those who have given suggestions to improve and enrich our textbook. Again, our thanks are extended for the positive thoughtful considerations of others.

Manufacturing and service industries both depend on cost accounting to provide management with the decision support and control tools they require. The competitive environment of manufacturing has forced dramatic changes in cost accounting and control systems. Using Horngren’s Cost Accounting allows students to understand these changes. Service industries, where competition is often not as intense as in manufacturing, may not have implemented many of the advanced cost accounting techniques developed for manufacturing; this is changing, however, as service industries encounter ever more intense competition, particularly in areas such as transportation, health care, and banking.

4. Critiques and Future Directions of Horngren’s Cost Accounting

In a dynamic and evolving business environment, there are always missed opportunities and potential flaws in a textbook. The evolution and impact of business informative infrastructures which enabled a wide variety of cost and cost management options for managers are quite extensive and unique. Nonetheless, Horngren’s Cost Accounting still focuses on the predigital industrial organizations. Developed in the age of worldwide web for more than two decades, the structure in the book cannot capture any sort of dynamic business propagation to render an effective adaptation. Furthermore, the book’s coverage and presentation are narrowly skewed toward a traditional cost and management accounting perspective. Its coverage has not satisfactorily taken into account the rapidly-growing markets of technology-mediated business models motivated by internet catalysts, such as economic and business intelligence, business controlling services, social networking and other internet 2.0 services, security, data protection and auditing services but not limited to e-commerce.

As a widely adopted cost and managerial accounting book around the world for 13 editions spanning over 40 years, Horngren’s Cost Accounting has received many acknowledgments and praises for its enduring objective and structure, broad coverage of the cost and managerial accounting landscape, well-organized balanced supply of theory and practical applications, and efficient support tools to enhance student understanding. However, it does not assure that such features are satisfactorily externalized in the most updated textbook edition logically ensued from the original authorship and text organization, even though Horngren et al. continued to shape it. The criticisms addressed here focused on the ‘myopic’ coverage of contemporary business practices, the descriptive nature by sacrificing conceptual rigor, and the refrained reflection on recent emerging theoretical constructs and alternative cost accounting uses in return for teaching simplicity.