Limitations of accounting measurement

Market globalization and demand dominance have become the main characteristics of contemporary economic development. The diversity of demand and the variability of business environment make enterprises have to strengthen the process management of business processes to ensure that enterprises can adjust in time and adapt to the changing market demand. The traditional management cost measurement model is attached to the accounting system of financial accounting, and it is difficult to provide relevant cost information for management decision-making in time, accurately and truly. Because the traditional cost accounting system depends on the account system, it has structural congenital defects and cannot meet the requirements of multi-objectives well. Thomas Johnson and Kaplan (H.T. Johnson &; Robert S. Kaplan (1987) pointed out that the current cost accounting system tries to meet three objectives: (1) to allocate part of the period cost to products so as to prepare financial statements in time; (2) Providing process control information for the cost center manager; (3) Provide a product cost estimation data for products and managers. Usually, only one cost system is used to achieve these three completely different goals. Since the financial accounting thought dominated, only the first goal has been accomplished well. However, the cost system that only meets the needs of external financial reporting can not strengthen the process control of cost center, and it will also lead to the distortion and error of product cost.

In short, the three functions of process control, product cost calculation and financial reporting will have different reporting periods, different changes and fixed cost classifications, different trajectories and distribution degrees, different related cost structures and different objects. These three systems come from the general summary foundation and serve different functions. Instead of trying to design a comprehensive system, they want to design different systems to better perform each function. It can be seen that the traditional single cost measurement model can no longer meet the requirements of multi-objective cost information.

The traditional cost measurement model based on the integration of 1920 cost records and accounting accounts has faced the severe challenge of "correlation disappearance". Eighty years ago, accountants in Britain and the United States had a heated debate on whether cost records should be combined with the accounting subject system. Today, this controversial issue has been raised again. It is imperative for the cost measurement mode to break through the single combination system of cost and accounting. This is not a simple denial of the current cost accounting measurement system, nor a successful restoration of British and American accounting that opposed the combination of cost and account 80 years ago, but a new sublimation.