difference Between Cost Accounting and Financial Accounting?
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Answer Posted / v.k.tanseer shadab
Hai im V.K.Tanseer Shadab,M.com,DEE,DCE,ICWA,MBA,MCA..
my E-mail:vktanseer_shadab@yahoo.com
I will try to explain in brief you about
Cost A/c (V/s) Finacial A/c that may more exhausted to you.
(A) STATUTORY OBLIGATION
Their is no any Statutory Obligation indeed to maintain
such A/c for maintain CostA/c.
In case of Finacial A/c its Statutory Obligation,several
Acts has governs like INDIAN COMPANIES ACT 1956, INSURANCE
COMPANIES ACT, INDIAN INDUSTRIAL ACT etc.
(B) ADMINISTRATIVE PURPOSE
For Administrative concern its may irrelevant to them.for
maintaining the Cost A/c.
But in Case of Financial A/c its fetch the real fair of
the business during the year.
(C) MANAGEMENT PURPOSE
Maintaing of systematic Cost A/c its a seems to be a
vigilance Management (in short effective Management).
Though they maintain the Finacial A/c its a bounded
duties of the Managemet.
(D) COVEREGE
Cost A/c may cover its some specific areas,like
Manufacturing,Production,Purchasing etc.
The Financial A/c may cover as a Whole of the Organisation
right from Raw material purchased to Sold of Goods.
(E) APPOINTMENT OF AUDITURE
For Cost A/c appointment of Auditore is optional
one.those who aware of A/c they may can handle such A/c.
In case of Financial A/c Auditore must be Appointed as
per the insists of several ACTs like INCOME TAX ACT
1961,INDIAN COMPANIES ACT 1956 etc,(AUDITURE means he/she
must be CA i.e showed qualified Chartered Accountant.
(F) INSURANCE AUTHORITIES
Insurance Authorities they may go through the Cost
A/c ,because they may know that its internal A/c which
disclosed the real facts of the business.
Though they may go through the Financial A/c randomly.
(G)PURPOSE
Cost A/c is maintains for to reveal the real facts of
business normally its may go through by the internal
Managerial persons.
As we discuss in earlier its Statutory Obligatory
one,apart from that the outsider eagerly wanted to view the
status of the firm During the specific period of time.like
Investor,Tax Authorities,Bankers (for Credit Grant(OD)over
draft),Financer,Debenture Holders etc..
(H)TREATMENT
Cost A/c can disclose the real facts of the firm without
hiding any point, because its maintain by internally ie.
(Management)in short its seems Net Result.
Financial A/c treat in such a way that real facts of firm
may not be reveal for eg:(i)Every Year Depreciation is to
be deducted as treating as loss But as per management
concern its falls on the Business it self. eg(ii)Specific
Reserves may not shown in the Balance Sheet of Final A/c
of Finacial A/c. but in Cost A/c all such Reserved are
Displayed.Hence it Shows the Gross Result.
(I)DECISION MAKING
For Decison Making purpose Cost A/c is a Vital A/c to take
the Managerial Decision.
Though Financial A/c its some how need to take Decision but
not upto the Cost A/c.
(J)APPRAISAL
Cost A/c can fetch the NON MONETARY aspects like
performance of a indivial, Work Experience etc because its
focus on specific areas.
In case of Financial A/c its fully focused on MONETARY
aspects only financial transaction are carried out.
(K)METHODOLOGY
Their is no any Specific Methodology is to be followed,it
may depend upon the internal persons based on their
convinince they may follow the rules like Single Entry Rule
or Double Entry Rule etc.
As far as Financial A/c concern,its advice to follow the
Double Entry System it may follows some sort of rules like
Banks they may have the seperate format to build the A/c.
(L)ACCOUNTING YEAR
For Cost A/c their is no any hard or fast rules to follow
the Accounting year to Opening & Closing of A/c
Accounting year means 12month report sarts from 1st date of
April to 31st of April will be treated as Accounting year.
its may continued years together.
In case of Financial A/c it will be closed(Accounting Year)
THANKING YOU
feel free to ask any Clarification at any point or any
subject it may A/c 0r Commerce 0r Electrical & Electronics
0r in Computer Related Both Hardware & Software concern.
Hope you may response
my E-mail:vktanseer_shadab@yahoo.com
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