COMPARISON OF COST ACCOUNTING,

FINANCIAL ACCOUNTING & MANAGEMENT

ACCOUNTING

Cost and Management Accounting

Guided By: Presented By:

Dr. Vedant Pandya Amisha Pandya

Department Of Business Administration

Maharaja Krishnakumarsinhji Bhavnagar University
Introduction
 Cost Accounting

 Meaning:
 Recording all costs
 Improve management

 Definition:
 Recording
 Classifying
 Analyzing
 Summarizing
Features:

 To determine costs
 Records income & expense
 Provide Statistical data
 Financial Accounting

 Meaning:
 Reporting

 Definition:
 Keep Financial transactions
 Using standardized guidelines
 Presented in Financial statements
 Features:

 Relevance
 Materiality
 Understability
 Reliability
 Comparability
 Management Accounting
 Meaning:
 Concerned with Information

 Definition:
 Analyzing business costs
 Prepare internal reports, records

 Features:
 Formulating strategy
 Planning & Controlling Activities
 Decision - Making
 Comparison of Cost Accounting & Financial Accounting
No. Basis Cost Accounting Financial Accounting
1. Purpose To provide detailed cost Record various transactions
information to management. and maintaining accounts

2. Which type of Historical and pre- Only historical cost.

cost used? determined cost.
3. Used for Employees, Shareholders,
directors,managers creditors,customers
4. Mandatory For manufacturing firms it is For all firms
mandatory
5. Valuation of Cost Cost whichever is less
stock
6. Time of Weekly,daily ,monthly End of the year
Reporting
7. Profit Analysis For Particular For particular period of whole
product,job,batch process. entity.

8. Forecasting Possible through budgeting Not possible.

techniques.
 Comparison of Cost Accounting & Management Accounting
No. Basis Cost Accounting Management Accounting
1. Purpose To provide detailed cost Decision - Making
information to management
2. Used for Stakeholders, Shareholders Management only
,Management
3. Nature Past and Present Future
4. Scope Narrow Broader
5. Measuring Quantitative. Quantitative and qualitative
both.
6. Sub-set Sub – set of Management Itself Stand alone
Accounting
7. Age Old concept Modern concept
8. Statutory Yes, Statutory audit is No requirement for statutory
requirement required audit
9. Dependence Independent Dependent on both Financial
& Cost accounting.
Comparison of Financial Accounting & Management Accounting
No. Basis Financial Accounting Management Accounting
1. Purpose Record various transactions Decision - Making
and maintaining accounts
2. Used for Investors and Stakeholders Management only

3. Nature Past – Historical Future- Historic &Predictive

information Informations
4. Scope Narrow Broader
5. Measuring Quantitative Quantitative and qualitative
both.

6. Subject matter Deals with whole business. Deals Seperately with different
unit.
7. Statutory Yes, Statutory required No requirement for statutory .
requirement

8. Periodicity of For public use For Management only.

Reporting
9. Accounting Based on accounting No specific rules are adopted.
principles principles.
 Conclusion
 Cost Accounting is helpful in the decision
making of the managers to control costs, but
it lacks comparability.
 Financial accounting is capable of making
comparisons, but future forecasting cannot
be done through this information.
 Both cost accounting & management
accounting help management make effective
decisions.
 Conclusion

 Financial accounting & management

accounting, both are great tools for
management to run the business well.
 Management accounting is solely devoted to
serving management decision making.
 Financial accounting is mandatory as per the
statutory requirement.
Thank You