financialaccounting and cost accounting

2.  FINANCIAL ACCOUNTING
- It deals with the preparation of the periodic report of the
company’s financial position and the results of operations
to external parties through financial statements, income
statement and statement of cash flow.
-It gives an information that whether the company is in
loss/profit.
 COST ACCOUNTING
-Cost accounting is the application of accounting and
costing principles, methods, and techniques in the
ascertainment of costs and the analysis of saving or excess
cost incurred as compared with previous experience or with
standards.

3. POINT OF
DIFFERENCE
FINANCIAL
ACCOUNTING
COST ACCOUNTING
PURPOSE
Purpose of the financial
statement is to show
correct financial position
of the organization.
To calculate cost of each
unit of product on the
basis of which we can
take accurate decisions.
PERIOD
Period of reporting of
financial accounting is at
the end of financial year.
Reporting under cost
accounting is done as per
the requirement of
management or as-and-
when-required basis.
REPORTING
In financial accounting,
costs are recorded
broadly.
In cost accounting,
minute reporting of cost
is done per-unit wise.

4. COVERAGE OF
TRANSACTION
It covers the
transactions of the
whole firm i.e.
complete Transaction
Only a part of the
transaction is covered
such as manufacturing,
sales and services
INDEPENDENT ENTITY
Financial Accounting is
independent of cost
accounting .
Cost accounting depends
upon financial
accounting for the
supply of basic data for
analysis
PROCESS
Journal entries, ledger
accounts, trial balance,
and financial statements
Cost of sale of
product(s), addition of
margin and
determination of selling
price of the product.
FORECASTING
Forecasting is not at all
possible
Forecasting is possible
through budgeting
techniques.

5. RELATIVE EFFICIENCY
Relative efficiency of
workers, plant, and
machinery cannot be
determined under it.
Valuable information
about efficiency is
provided by cost
accountant.
FIXATION OF SELLING
PRICE
Fixation of selling price
is not an objective of
financial accounting.
Cost accounting provides
sufficient information,
which is helpful in
determining selling
price.
ANALYSIS OF
EXPENDITURE
It analyses the
expenditure under
different types of
expenses,e.g: wages
,salaries, depreciation.
It analyses the
expenditure under
different heads of
performances distinct
from types of
expenses,e.g: direct
labour, indirect labour,
direct material.