Though there is much common ground between financial accounting and cost accounting and though in fact cost accounting is an outgrowth of financial accounting yet the emphasis differs.
Distinction Between Financial Accounting And Cost Accounting
Though there is much common
ground between financial accounting and cost accounting and though in fact cost
accounting is an outgrowth of financial accounting yet the emphasis differs.
Firstly financial accounting is more attached with reporting
the results of business to persons other than internal management – government,
creditors, investors, researchers, etc. Cost accounting is an internal
reporting system for an organisation’s own management for decision making.
Secondly financial accounting data is historical in nature and its periodicity
of reporting is much wider. Cost accounting is more concerned with short-term planning
and its reporting period much lesser than financial accounting. It not only
deals with historic data but also is futuristic in approach. Thirdly, in
financial accounting the major emphasis in cost classification is based on the
type of transaction e.g. Salaries, repairs, insurance, stores, etc. But in cost
accounting the major emphasis is on functions, activities, products, processes
and on internal planning and control and information needs of the organisation.
Tags : Accounting For Managers - Cost Estimation And Control-Cost Accounting
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