The document compares and contrasts financial accounting, cost accounting, and management accounting. Financial accounting provides information to external parties and focuses on reporting profits and financial position. Cost accounting provides information to management for planning, operations, control, and decision making. It breaks costs down on a unit basis. Management accounting helps managers make effective decisions and uses both historical and predictive information. It has a broader scope than cost accounting.

1. Difference Between Cost
Accounting ,Financial
Accounting and Management
Submitted by
Aavani Sivadasan
MBA I Batch B

2. Point of
Distinction
Financial Accounting Cost Accounting
1. Purpose It provides information about the profit and
loss and financial position to owner and other
outside parties
It provides information to management for
proper planning, operation, control and decision
making.
2. Form of Accounts These accounts are kept in such a way as to
meet the requirement of Companies Act and
Income Tax Act
These accounts are generally kept voluntarily to
meet the requirements of management. But
now Companies Act has made it obligatory to
keep cost records in some manufacturing
industries
3. Recording According to the nature of expenses According to the purpose for which the cost are
incurred
4. Control It lays emphasis on recording aspect without
attaching any importance to control
It provides a detailed system of control for
material labour and overhead cost with the help
of standard costing and budgetary control
5. Periodicity of
Reporting
It reports operating results and financial
position usually at he end of the year
It gives information through cost reports to
management as and when required.

3. 6. Analysis of Profit They are independent in nature and
discloses the net profit or loss
They are only a part of financial accounts and
discloses profit or loss of each product ,job or
services
7. Reporting of Costs The cost are reported in aggregate in final
accounts
The cost are broken down on a unit basis in cost
accounts
8.Information Monetary information is only used Non monetary information like units are also used
9. Fixation of selling
price
They are not maintained with the object of
selling price
They provide sufficient data for fixation of selling
price
10. Figures Deals mainly with actual facts and figures Deals partly with facts and figures and partly with
estimates
11. Stock Valuation Valued at cost or market price whichever is
less
Valued at cost

4. Point of
Distinction
Cost Accounting Management Accounting
1. Meaning They revolve around cost computation cost
control and cost reduction
They helps in making effective decision in
business
2. Application Prevent a business from incurring cost
beyond budget
Offers a big picture of how management
should categorise
3. Scope Scope is much narrow Scope is much broader
4. Measurement grid Quantitative Both quantitative and qualitative
5. Sub-Set Cost Accounting is the sub set of
management accounting
Management accounting itself is pretty vast

5. 6. Decision Making Historic information is used Both historic and predictive are used
7. Statutory Requirement Statutory audit of cost accounting is a
requirement in big business house
Audit of management accounting has no
statutory requirement
8. Dependence Cost account is independent Management account ids dependable both to
cost and financial accounting
9. Used for Management, shareholders and vendors Only for management

6. Point of
distinction
Financial Accounting Management Accounting
1. Objectives The main objectives of financial accounting are to
disclose the end results of the business, and the
financial condition of the business on a particular
date.
The main objective of managerial accounting is
to help management by providing information
that is used to plan, set goals and evaluate these
goals.
2. Audience Financial accounting produces information that is
used by external parties, such as shareholders
and lenders.
Managerial accounting produces information
that is used within an organization, by managers
and employees.
3. Required It is legally required to prepare financial
accounting reports and share them with
investors.
Managerial accounting reports are not legally
required.
4. Segment
Reporting
Pertains to the entire organization. Certain
figures may be broken out for materially
significant business units.
Pertains to individual departments in addition to
the entire organization.
5. Focus Financial accounting focuses on history; reports
on the prior quarter or year.
Managerial accounting focuses on the present
and forecasts for the future.

7. 6. Format Financial accounts are reported in a specific
format, so that different organizations can
be easily compared
Format is informal and is on a per
department/company basis as needed.
7. Rules Rules in financial accounting are prescribed
by standards such as GAAP or IFRS. There
are legal requirements for companies to
follow financial accounting standards.
Managerial accounting reports are only used
internally within the organization; so they are
not subject to the legal requirements that
financial accounts are.
8. Reporting Frequency
and duration
Defined - annually, semi-annually,
quarterly, yearly.
As needed - daily, weekly, monthly.
9. Information Monetary, verifiable information. Monetary and company goal driven
information.