Difference between cost accounting and financial accounting and management accounting
Show The two accounting system plays a significant role, as the users are the internal management of the organization. While cost accounting has a quantitative approach, i.e. it records data which is related to money, management accounting gives emphasis on both quantitative and qualitative data. Now, let’s understand the difference between cost accounting and management accounting, with the help of given article.
Comparison Chart
Definition of Cost AccountingCost Accounting is a method of collecting, recording, classifying and analyzing the information related to cost. The information provided by it is helpful in the decision-making process of managers. There are three major elements of cost which are material (direct & indirect), labor (direct & indirect) and overhead (Production, Office & Administration, Selling & Distribution, etc.). The main aim of the cost accounting is to track the cost of production and fixed costs of the company. This information is useful in reducing and controlling various costs. It is very similar to financial accounting, but it is not reported at the end of the financial year. Definition of Management AccountingManagement Accounting refers to the preparation of financial and non-financial information for the use of management of the company. It is also termed as managerial accounting. The information provided by it is helpful in making policies and strategies, budgeting, forecasting plans, making comparisons and evaluating the performance of the management. The reports produced by management accounting are used by the internal management (managers and employees) of the organisation, and so they are not reported at the end of the financial year. Key Differences Between Cost Accounting and Management Accounting
Similarities
ConclusionBoth the cost accounting and management accounting are a part of accounting. They are helpful in for ensuring the smooth and efficient running of the business. On the basis of the information provided by the two entities various analysis are conducted. Cost accounting aims at reducing extra expenditure, eliminating unnecessary costs and controlling various costs. On the other hand management accounting aims at the planning of policies, strategy formulation setting goals, etc. |