1.

What is the difference between cost

accounting and financial accounting 2. What is
the different between cost accounting and
management accounting?
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Cost accounting and managerial accounting are really the same thing.

The key difference between managerial/cost and financial accounting is that managerial
accounting information is aimed at helping managers within the organization make decisions. In
contrast, financial accounting is aimed at providing information to parties outside the
organization. cost is the amount of the expenditure. In cost accounting we can find cost of goods
and services.

Financial accounts shows the profit and loss and balance sheet made during an accounting period
also financial position of the business as on a particular date. cost accouting provides the
management detailed information regarding cost of each product, services etc.

Cost Accounting focuses on the costs of production and inventory valuations. Management
Accounting produces internal financial reports and analysis prepared in such a way to assist
managers in making decisions (such as expense reduction, capital investment, etc.). Financial
Accounting produces financial reports in accordance with GAAP and legal guidelines and would
generally be the format which is distributed externally for banks, investors, etc

What is the difference between management

accounting financial accounting and cost
accounting?
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Management accounting is concerned with the provisions and use of accounting information to
managers within organizations, to provide them with the basis to make informed business
decisions that will allow them to be better equipped in their management and control functions.
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. The fundamental need for
financial accounting is to reduce principal-agent problem by measuring and monitoring agents'
performance and reporting the results to interested users.

Cost Accounting - In management accounting, cost accounting establishes budget and actual
cost of operations, processes, departments or product and the analysis of variances, profitability
or social use of funds. Managers use cost accounting to support decision-making to cut a
company's costs and improve profitability.

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Cost accounting is usually involved with management accounting. Financial accounting tends to
deal with the past and presents information like statements for public and private use.
Management accountants are involved with the budgeting and costing sides of things and present
information only for the sole users of the business, so only internal uses like management,
shareholders etc.

Financial accounting versus management

accounting
FIANCIAL ACCOUNTING VERSUR MANAGERIAL ACCOUNTING

Financial accounting and managerial accounting can be differentiated from each other on
the basis of the following points of distinction:

Definition:

Financial accounting is the art of recording, classifying and summarizing in a significant

manner and in terms of money transactions and events which are, in part at least, of a
financial character, and interpreting the results thereof.

Management accounting is the presentation of accounting information in such a way as to

assist management in the creation of policy and in the day to day operation of an
undertaking.

Purpose:
The main purpose of financial accounting is to prepare Profit and Loss Account and
Balance Sheet for reporting to owners or shareholders and other outside agencies; i.e.
external users.

The main purpose of managerial accounting is to provide detailed cost information to

management; i.e. internal users.

Periodicity of reporting:

Financial reports are prepared periodically, usually on annual basis.

Managerial reporting is a continuous process and may be daily, weekly, monthly, etc.

Control aspect:

Financial accounting lays emphasis on the recording of financial transactions and does not
attach any importance to control aspect.

Managerial accounting provides for a detailed system of controls with the help of certain
special techniques like standard costing and budgetary control.

Historical and predetermined costs:

Financial accounting is concerned almost exclusively with historical records. The historical
nature of financial accounting can be easily understood in the context of the purposes for
which it was designed.

Managerial accounting is concerned not only with historical costs but also with
predetermined costs. This is because managerial accounting does not end with what has
happened in the past and extends to plans and policies to improve performance in the
future.

Types of transactions recorded:

Financial accounting records only external transactions like sales, purchases, receipts, etc.
with outside parties.

Managerial accounting not only records external transactions but also internal or
interdepartmental transactions like issue of materials by store to production department.

Types of statements prepared:

Financial accounting prepares general purpose statements like Profit and Loss Account
and Balance Sheet. That is to say that financial accounting must produce information that
is used by many classes of people, none of whom have explicitly defined informational
needs.
Managerial accounting generates special purpose statements and reports like Report of loss of
materials, idle time report, Variance report, etc. it identifies the user, discusses his problems and
needs and provides tailored information.

Six differences between management

accounting and financial accounting
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 All 5 Articles

4 of 5
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by Darrell Victor

Management accounting and financial accounting comprise the two main branches of
accounting, although the disticntion between them might appear to be gratuitous. Data related to
events, transactions and activities within an organisation form the common source of information
for management and financial accounting. However, there are critical distinctions in terms of the
format, users and purpose of the two branches. There are six major differences between financial
and management accounting.

1. Purpose

Financial accounting is designed to state the financial position of an organisation and provide
information about its revenue generation/profits to stakeholders. It is geared towards external
information users- primarily regulators, government and owners. Management accounting has an
internal focus, on the other hand. Accountants/accounting clerks prepare such information for
internal managers, who use it to aid and facilitate planning, decision-making and control.

2. Legal requirement

Management accounting is optional- used solely at the discretion of an organisation's managers.

External stakeholders usually do not even view management accounts. This is because there is
no legal requirement for any organisation to prepare management accounts. Financial accounts
are for external users. However, only limited liability companies bear the legal obligation to
produce these accounts.
3. Format and standards

The formats of management accounts are exclusively at the discretion of managers. However,
financial reports must adhere to International Financial Reporting Standards and International
Accounting Standards. This makes financial reports virtually standardized while management
accounting formats and systems vary widely among and within organisations.

4. Scope

Financial accounts represent an aggregate of entities, activities and operations for the whole
organisation, including any subsidiaries. The focus of management accounts is far more specific,
as it deals with particular activities, sections or departments. Management accounting has an
inherently narrower focus than financial accounting.

5. Content

Financial reports usually deals with financial information. In other words, most things in a
financial report are of a monetary nature (having a dollar value). Management accounts
incorporate both monetary and non-monetary measures, i.e. financial and non-financial
information. This does not mean that financial reports are not complete- just that data needs to be
transformed to monetary figures for financial reports. After all, financial reports do not account
for productivity or employee morale.

6. Period covered

By nature, financial accounts provide a historical representation of an organisation's operations

for a defined period. Management accounts can provide aspects of past operations and
projections for future operations, since they are also planning and decision-enabling tools.

The differences between financial and management accounting is significant to management and
accountants. Since information has objectives that information users define, production of
management accounts and financial accounts consider the needs of these users, whether internal
or external. Since financial reports for limited liability companies are mandatory and regulated, it
merely requires conformity.

Six differences between management

accounting and financial accounting
 1 of 5

by Nick Ford
 Accounting is an important part of modern business. To put it simply, the accounting
practices enables businesses to keep

read more

 2 of 5

by Leigh Goessl

People who do not routinely engage in accounting practices may initially think that
financial and managerial accounting

read more

 3 of 5

by Teresa Aira

With the advent of the Industrial Age in the nineteenth century, the need to produce
reports for a different group of users

read more

 4 of 5

by Darrell Victor

Management accounting and financial accounting comprise the two main branches of
accounting, although the disticntion between

read more

 5 of 5

by main maina

The general nature of accounting is to process information that is of economic value so

that it can aid the intended users

read more

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