Difference between financial accounting cost accounting management accounting
Grooming Financial Managers…Finance and Money HomeCash and Accrual system of accounting »Differences Between Financial accounting, managementaccounting and cost accounting FINANCIAL ACCOUNTING MANAGEMENT ACCOUNTINGPRIMARY USERS External( Investors, government Internal(Managers of business, authorities, creditors) employees)PURPOSE OF Help investors, creditors, and Help managers plan and controlINFORMATION others make investment, credit, business operations and other decisionsTIMELINES Delayed or historical Current and future orientedRESTRICTIONS GAAP FASB AND SEC GAAP does not apply, but information should be restricted to strategic and operational needsNATURE OF INFORMATION Objective, auditable, reliable, More subjective and consistent and precise judgmental, valid, relevant and accurateSCOPE Highly aggregated information Disaggregated information to about the overall organisation support local decisionsBEHAVIOURAL Concern about adequacy of Concern about how reports willIMPLICATIONS disclosure affect employees behaviourFEATURES Must be accurate and Usually approximate but timelyCompulsory under relevant and flexibleExcept for company law Is an end in itself few companies, it is not mandatory Is a mean to the endSEGMENTS OF It is primarily concerned with Segment reporting is theORGANISATION reporting for the company as a primary emphasis. whole. FINANCIAL ACCOUNTING COST ACCOUNTINGOBJECTIVE It provides information about It provides information of financial performance ascertainments of costs to andfinancial position of control costs and for decision the business. making about the costs.NATURE It classifies records, presents It classifies, records, presents
and interprets transactions in and interprets in a significant terms of money. manner materials, labour and overhead costs.RECORDING OF DATA It records historical data. It records and presents estimated, budgeted data. It makes use of both historical costs and predetermined costs.USERS OF INFORMATION External users like Used by Internal management shareholders, creditors, at different levels. financial analysts, government and its agencies,etc.ANALYSIS OF COSTS AND It shows profit/loss of the It provides details of costs andPROFITS organization. profit of each product, process, job,etc.TIME PERIOD They are prepared for a definite They are prepared as and when period, usually a year. required.PRESENTATION OF A set format is used for There are no set formats forINFORMATION presenting financial presenting cost informations. information.