Distinction Between Financial & Cost Accounting

 

Difference between Cost Accounting and Financial Accounting

The distinguishing features of financial accounting and cost accounting are given below.

 

Financial Accounting Cost Accounting 
1. It aims at finding out results of accountingyear in the form of Profit and Loss Account

and Balance Sheet.

 

1. It aims at computing cost of production/service in a scientific manner and then cost

control and cost reduction.

 

2. It is more attached with reporting theresults and position of business to persons

and authorities other than management

like government, creditors, investors,

owners etc.

 

2. It is an internal reporting system for anorganization’s own management for

decision making.

 

3. Financial Accounting data is historical innature

 

3. It not only deals with historical data but isalso futuristic in approach.

 

4. In financial accounting, the majoremphasis is in cost classification based on

type of transactions, e.g. salaries, repairs,

insurance, stores etc.

 

4. In cost accounting, classification is basicallyon the basis of functions, activities,

products, process and on internal planning

and control and information needs of the

organization.

 

5. In financial accounting, only thosetransactions are recorded which can be

expressed in monetary terms.

 

5. Cost accounting uses both monetary aswell as quantitative information.

 

6. It aims at presenting ‘true and fair’ viewof the profit and loss position as well as

financial position.

6. It aims at computing ‘true and fair’ view ofthe cost of production/services offered by

the firm.

7. Financial Accounts are subject to statutoryaudit to verify whether they disclose a

true and fair view of the profit and loss as

well as financial position

 

7. Cost accounts are subject to cost auditwhich verifies whether the cost accounts

disclose true and fair view of the cost of

production of the company.

 

 

 

 

 

 

 

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