Cost Types in Accounting refer to the various categories of expenses a business may incur. This includes costs associated with materials, labor, overhead, purchase of services and other miscellaneous items. To accurately capture all these transactions, it’s important for businesses to be familiar with the different Cost Type classifications. To simplify bookkeeping, each type is assigned a unique number or code to distinguish them from each other. These codes are then used to categorize the costs within each ledger, enabling better accountability and financial oversight. With a proper understanding of Cost Types, businesses can track their spending more effectively; and that means more money saved in the long run!