Definitions

FINANCIAL ACCOUNTING :

Financial accounting is the process which includes recording, interpreting & summarizing date taken from financial records of an organization and bring it out in an annual report for the benefit of people outside the organization COST ACCOUNTING :
A method of accounting in which all costs incurred in carrying out an activity or accomplishing a purpose are collected, classified, and recorded. This data is then summarized and analyzed to arrive at a selling price, or to determine where savings are possible. In contrast to financial accounting (which considers moneyas the measure of economic performance) cost accounting considers money as the economic factor of production.

Points Of Difference
Cost Accounting: Main Objective is to control Costs. Financial Accounting : Main Objective is to record transactions.

Cost Accounting: Analysis of cost is usually done on the basis of product ,department, activity etc. Financial Accounting : Revenues and related expenses are recorded for the entire period.

 Cost Accounting: It not only deals with historic data ,but is also futuristic in approach. Financial Accounting: It is historic in nature and dose nit consider future costs. Cost Accounting: It is considered with short term planning on a continous basis. Financial Accounting: Reports are prepared at the end of the period.

 Cost Accounting: It emphasizes the functions , activities, processes , products of the concern. Financial Accounting: emphasis is laid on classification of costs on the basis of transactions. Cost Accounting: Its Repots are used by the management for the purpose of decision making. Financial Accounting: The reports are used by the internal management and also by third parties ,like actual and prospective investors.

 Cost Accounting: Cost Accounting is governed primarily by the, Cost accounting Standards issued by the ICWAI. Financial Accounting: It is governed primarily by the Companies Act and the accounting standards issued by the ICAI. Cost Accounting: Some of the reports prepared by the cost accounting system are Statements of Cost,Labour Utilization, Abnormal Loss, Reconciliation etc. Financial Accounting: Chief reports prepared by the financial accounting system are Trial Balance ,Profit and Loss Account, Balance Sheet etc .