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Explain key differences between financial accounting and cost accounting

Introduction to Financial accounting

Answers

KevinNyabute
1.Cost Accounting aims at maintaining cost records of an organisation. Financial Accounting aims at maintaining all the financial data of an organisation.
2.Cost Accounting Records both historical and per-determined costs. Conversely, Financial Accounting records only historical costs.
3.Users of Cost Accounting is limited to internal management of the entity, whereas users of Financial Accounting are internal as well as external parties.
4.In cost, accounting stock is valued at cost while in financial accounting, the stock is valued at the lower of the two i.e. cost or net realisable value.
5.Cost Accounting is mandatory only for the organisation which is engaged in manufacturing and production activities. On the other hand, Financial Accounting is mandatory for all the organisations, as well as compliance with the provisions of Companies Act and Income Tax Act is also a must.
6.Cost Accounting information is reported periodically at frequent intervals, but financial accounting information is reported after the completion of the financial year i.e. generally one year.
7.Cost Accounting information determines profit related to a particular product, job or process. As opposed to Financial Accounting, which determines the profit for the whole organisation made during a particular period.
8.The purpose of Cost Accounting is to control costs, but the purpose of financial accounting is to keep complete records of the financial information, on the basis of which reporting can be done at the end of the accounting period.
kevinnyabute answered the question on March 5, 2018 at 07:19

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