Relationship and differences of financial accounting cost

relationship and differences of financial accounting cost

Can you explain relationship between financial accounting, management accounting Managerial accounting and Cost Accounting also provide instructions on. There are several different types of accounting, but if you're in business, the two that you are most likely to come across are 'Financial. There are a number of differences between cost accounting and financial accounting, The information in a cost accounting report can contain both financial.

While these two types of accounting are different in many aspects, they share several similarities.

relationship and differences of financial accounting cost

Cost and financial accounting have similar terminology and both use information provided through financial reports. Terminology Cost and financial accounting both use the same basic accounting terminology.

relationship and differences of financial accounting cost

For example, both types of accounting base information on debits and credits. Both also refer to a general ledger; which is a book that tracks all financial transactions in various accounts.

The same accounts and types of accounts are also used cost and financial accounting. Both types of accounting separate accounts into categories consisting of assets, liabilities, equities, revenues and expenses. Within each category, one or more accounts exist that are used to track specific financial transactions.

Cost Accounting vs Financial Accounting

Reports Financial accounting is used to produce reports that include financial statements, including the balance sheet, income statement and statement of cash flows. This information is given to external parties, such as stockholders, investors and lending institutions. With cost accounting, the documents produced through financial accounting are used by people within the company to make internal decisions.

The use of financial statements is vital to both types of accounting. The difference lies in the groups of people that use the information. Video of the Day Brought to you by Techwalla Brought to you by Techwalla Historical Data Cost accountants and financial accountants both are interested in historical information about a company.

It is based on actual transactions only. In cost accounting, we book actual transactions and compare it with the estimation.

Similarities Between Cost Accounting & Financial Accounting |

Hence costing is based on the estimation of cost as well as on the recording of actual transactions. Controlling Correctness of transaction is important without taking care of cost control. Cost accounting done with the purpose of control over cost with the help of costing tools like standard costing and budgetary control.

Period Period of reporting of financial accounting is at the end of financial year. Reporting under cost accounting is done as per the requirement of management or as-and-when-required basis.

Cost Accounting vs Financial Accounting

Reporting In financial accounting, costs are recorded broadly. In cost accounting, minute reporting of cost is done per-unit wise. Fixation of Selling Price Fixation of selling price is not an objective of financial accounting. Cost accounting provides sufficient information, which is helpful in determining selling price. Relative Efficiency Relative efficiency of workers, plant, and machinery cannot be determined under it. Valuable information about efficiency is provided by cost accountant.

Process Journal entries, ledger accounts, trial balance, and financial statements Cost of sale of product saddition of margin and determination of selling price of the product.