Question { Amity, 147848 }

difference Between Cost Accounting and Financial Accounting?

Answer

cost accounting is for internal use while financial
accounting is both internal and externaluse.the purpose of
cost accounting is to ascertain the cost of a product hence
it provides management with information as to what
percentage markup should be placed in order to realize
profits. it also helps management with ways of lowering
total costs hence cost accounting is mainly for internal
use.it provides management with decision as to buy or make
and the worthiness of undertaking a project

financial accounting is for both internal and external it is
also used by management to evaluate performance through the
statement of comprehensive income and through interpretation
using ratios also evaluate the rate into which profits are
turned into cash through the statement of cash flows and
also evaluating the leverage of the company but the
financial accounting is mainly for externals that is for
stakeholders : shareholders ,creditors ,security providers
that is why they are published.

the other difference is that financial accounting is a
statutory requirement and is prepared in compliance with
international accounting standards and IFRS while cost
accounting is not a statutory requirement but its a company
requirement