Cost Accounting VS

Financial Accounting



Cost accounting
Cost accounting is a complex process of
collecting, analyzing, summarizing and evaluating
various alternative courses of action. Its goal is to
advise the management on the most appropriate
course of action based on the cost efficiency and
capability. Cost accounting provides the detailed
cost information that management needs to control
current operations and plan for the future
The process of cost accounting includes cost
behavior, break-even point, profit planning,
operational budgeting, capital budgeting, relevant
costs for decision making, activity based costing,
and standard costing.
Unlike the accounting systems that help
in the preparation of financial
reports periodically, the cost
accounting systems
and reports are not subject to
rules and standards like the Generally
Accepted Accounting Principles.
As a result, there is wide variety in the
cost accounting systems of the different
companies and sometimes even in
different parts of the same company or
organization.
Types of cost accounting
approaches


standardized or standard cost
accounting
lean accounting
activity-based costing
resource consumption
throughput accounting
Life cycle costing
environmental accounting
Target costing

Financial accountancy
Financial Accountancy (or financial
accounting) is the field
of accountancy concerned with the
preparation of financial statements for
decision makers, such
as stockholders, suppliers, banks,
employees, government agencies,
owners, and other stakeholders.
Financial capital maintenance can be
measured in either nominal monetary
units or units of constant purchasing
power.
Financial accountancy is used to prepare
accounting information for people outside the
organization or not involved in the day-to-day
running of the company.
In short, financial accounting is the process of
summarizing financial data taken from an
organization's accounting records and publishing in
the form of annual (or more frequent) reports for
the benefit of people outside the organization.
Financial accountancy is governed by both local
and international accounting standards. Because
external financial statements are used by a variety
of people in a variety of ways, financial accounting
has common rules known as accounting
standards and as generally accepted
accounting principles (GAAP)

Financial Statements

Income statement (sometimes
referred to as "results of
operations" or "earnings statement"
or "profit and loss [P&L]
statement")
Balance sheet (sometimes referred
to as "statement of financial
position")
Statement of cash flows
(sometimes referred to as "cash
flow statement")
Statement of stockholders' equity

Financial Accounting VS Cost
Accounting

Financial accounting aims at finding out results of
accounting year in the form of Profit and Loss
Account and Balance Sheet. Cost Accounting aims at
computing cost of production/service in a scientific
manner and facilitate cost control and cost reduction.
Financial accounting reports the results and position
of business to government, creditors, investors, and
external parties.
Cost Accounting is an internal reporting system for an
organizations own management for decision making.
In financial accounting, cost classification based on
type of transactions, e.g. salaries, repairs, insurance,
stores etc. In cost accounting, classification is
basically on the basis of functions, activities,
products, process and on internal planning and
control and information needs of the organization.


Financial accounting aims at presenting
true and fair view of transactions, profit
and loss for a period and Statement of
financial position (Balance Sheet) on a
given date. It aims at computing true and
fair view of the cost of
production/services offered by the firm.
While cost accounting aims at the internal
day to day routine such as Ascertainment
of Cost, Ascertainment of Profitability,
Classification of Cost, Control of Cost,
Fixation or Selling Prices.
Thank you