Differences between financial accounting and cost accounting
|Basis ||Financial Accounting ||Cost accounting |
|(i) Objective ||It provides information about the financial performance and financial position of the business. |
|It provides information of ascertainment of cost to control cost and for decision making about the cost. |
|(ii) Nature ||It classifies records, presents and interprets transactions in terms of money. ||It classifies, records, presents, and interprets in a significant manner the material, labour and overheads cost. |
|(iii) Recording ||It records Historical data. ||It also records and presents the of data estimated/budgeted data. It |
makes use of both the historical costs and pre-determined costs.
|(iv) Users of information ||The users of financial accounting statements are shareholders, creditors, financial analysts and government and its agencies, etc. ||The cost accounting information is used by internal management at different levels. |
|(v) Analysis of costs and profits ||It shows the profit/ loss of the organisation. ||It provides the details of cost and profit of each product, process, |
job, contracts, etc.
|(vi) Time period ||Financial Statements are prepared for a definite period, usually a year. ||Its reports and statements are prepared as and when required. |
|(vii) Presentation of information ||A set format is used for presenting financial information. ||There are not any set formats for presenting cost information. |