What is Cost Accounting?

It is an accounting system that aspires to capture an enterprise’s costs of manufacturing by

evaluating the input costs of each step of manufacturing as well as fixed costs, namely,
depreciation of capital equipment. Cost accounting will initially compute and document these
costs separately, then analyse input outcomes to output or actual outcomes to assist the
enterprise’s management in computing financial accomplishment.

What is Management Accounting?

Basis Cost Accounting Management Accounting

Meaning Cost accounting is an accounting system Management Accounting refers to

that aspires to capture an enterprise’s costs
of manufacturing by evaluating the input
costs of every step of manufacturing as well
as the fixed costs, namely, depreciation of
capital equipment.
the outlining of financial and non-
financial data for the utilisation of
management of the enterprise. It is
also known as managerial
accounting.

Data type Quantitative Both Quantitative and Qualitative

Scope Focused on distribution, allocation, Convey (impart) and effect factor of

determination and accounting factors of the the cost
cost

Objective Determined in cost production Furnishing data to the managers to

fix goals and anticipate strategies

Specific Yes No
procedure

Planning Short term planning Both Short and long term planning

Recording Records both past and present data Focuses more on scrutinizing for
future projects
 Interdependency Can be installed without a Management Cannot be installed without cost
accounting accounting

What is Cost Accounting?

Cost accounting is referred to as a form of managerial accounting that is used by businesses to

classify, summarize and analyse the different costs with the purpose of cost control and cost
reduction and thereby helping management in making better decisions.

The primary function of cost accounting is said to be arranging, recording and identifying
suitable investment allocation for investment to determine the costs of goods and services. It also
helps in presenting relevant data to the management related to service, contract or finding
shipment cost.

It also includes information related to cost of production, distribution and selling.

What is Financial Accounting?

Financial accounting is a branch of accounting that is concerned with the summarizing, recording
and reporting of financial transactions that take place in a business concern over a time period.

Financial accounting is used for the preparation of various financial statements that can be used
by companies to showcase their financial performance to the various users of financial
information like creditors, investors, customers and suppliers etc.

Difference Between Cost Accounting And Financial Accounting

Cost Accounting Financial Accounting

Definition

Cost accounting is referred to as a form of managerial Financial accounting is a branch of

accounting that is used by businesses to classify, accounting that is concerned with the
summarize and analyse the different costs with the purpose summarizing, recording and reporting of
of cost control and cost reduction and thereby helping financial transactions that take place in a
management in making better decisions. business concern over a time period.

Type of Information documented

Documents the data associated with the labour and Documents the data that are in monetary
material which are utilised in the manufacturing terms.
procedure.

Estimation of Stock

Stock value is estimated at cost Stock value is estimated based on the

lesser value between net realisable value
or Cost

Analysis of Profit

Normally, the gains are investigated for a specified job, Profits, Income and expenditure are
batch, product and procedure investigated together for a specific period
of the entire trading concern

Primary Objective

Controlling and reducing cost Towards maintaining the complete record

of the financial transactions