1. What Is the Difference Between Cost Accounting and Financial Accounting 2

1. What is the difference between cost accounting and financial accounting 2. What is the different between cost accounting and management accounting? In: Accounts Payable, Accounts Receivable, Business Taxes [Edit categories] MSc Finance & Accountingwww.LSBF.org.uk/Finance Degree, Top London School, Leading Faculty, Career Service, Visa Support Ads [Improve] 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? In: Business Accounting and Bookkeeping, Accounts Payable, Accounts Receivable [Edit categories] Reduce Operating Costswww.Juniper.net Download Free Forrester Study & Reduce Your Network Costs. Ads [Improve]

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.

Finance Accounting Degreewww.LSBF.org.uk/Finance Study Finance and Accounting, Top Masters Degree, London, UK Ads [Improve] 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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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.

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