Difference between Cost Accounting and Financial Accounting

Difference between Cost Accounting and Financial Accounting

 Cost Accounting Vs Financial Accounting

1. Meaning :- cost accounting is a branch of accounting focused on recording, analysing and managing the cost incurred by a business to enhance it's efficiency and profitability. Whereas financial accounting involves the system recording, summarising and reporting of a companies financial transactions and information to external parties.

2. Objectives:- To ascertain cost, control cost and provide information for decision making while in cost accounting to provide information about profitability and financial position of the business.

3. Nature of Transactions:- Cost accounting based on data available from financial accounts and generated within costing department while financial accounting mainly record transaction with outsiders.

4. Control :- Cost Accounting Emphasis is on control on various cost while financial accounting Emphasis is on reporting not on control.

5. Legal requirement :- Cost accounting preparation is voluntary except in few cases where law makes it mandatory whereas financial accounting have to meet a requirements of the companies act and the income tax act.

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