An account that an entity uses to accurately account for certain items of cost. For that purpose, there are specific measures to be taken: the work to be done, the department/ unit which is responsible for doing it, and determining who will bear its cost. A cost account aims to record in one place an entity’s total cost of production.

Cost account is used, under cost accounting, to track of all costs associated with a business or project. Cost accounting involves analyzing and tracking expenses, budgets, cost allocations and asset values. This helps entities to make informed decisions about its operations/ activities and envisage its profitability (in a bid to maximize it).

A cost account forms part of the double entry system of cost accounting, presenting the details of expenses incurred for a particular function, job, contract or process.

Under non-integrated system of accounting, cost accounts maintain impersonal accounts (real accounts and nominal accounts). Real accounts consist of accounts relating to stocks (inventory), WIP, and finished goods. In nominal accounts, both cost and revenue items are recorded.