This document defines and compares cost accounting, management accounting, and financial accounting. It also discusses the objectives, nature, and scope of cost accounting and how cost accounting aids management. Cost accounting is defined as classifying, recording, and allocating costs to determine cost and profitability. Management accounting provides accounting information to aid management decision making. Financial accounting deals with financial resources and obligations to external parties. The document outlines key differences between cost accounting, management accounting, and financial accounting.

1. What is Cost Accounting
CIMA(chartered institute of management
Accountants)
“The classifying recording and appropriate allocation of
expenditure for the determination of cost, the relation
of these costs to sales value and ascertainment of
profitability”
It consist of principles an rules:
(a) The cost of Mfg a products e.g. chemical, television,
steel etc.
(b) the cost of providing a service e.g. electricity,
transport etc.

2. What is Management
Accounting(Managerial Accounting)
• “Management accounting is the development
and interpretation of accounting information
to aid management in running the business
and in the day-to-day operation of an
undertaking”

3. Financial Accounting
• “It deals with the financial resources,
obligation and activities of an economic
entities”

4. Purpose of Management Accounting
• Management accounting is applied to
provision of information for management
activities such as decision making, planning
and controlling.
Management accounting consist of four
essential tasks:
1. COST DETERMINATION
2. COST CONTROL

5. 3. PERFORMANCE EVAUATION
4.SUPPLYING INFORMATION FOR PLANNING
AND DECISION MAKING

6. Nature of Cost Accounting
• It includes principles, techniques and system
which are employed in a business to plan and
control the utilization of its resources.
• The words costing and cost accounting are
often use interchangeably

7. Scope of Cost Accounting
• All types of activities, Mfg and non-Mfg in
which monetary value is involved, should
consider the use of cost accounting e.g.
wholesale and retail business, banking and
insurance companies, railways, hostels,
hospital, school, college etc all may employ
cost accounting techniques to operate
efficiently.

8. Objectives of cost accounting
(a) To ascertain the cost per unit of the different
products manufactured by the business concern.
(b) To provide a correct analysis of cost both by
processes or operations and by different elements of
cost.
(c) To ascertain the profitability of each of products
and advise the management as to how these profit
can be increased.
(d) To advise management on future expansion
policies and proposed capital projects.

9. (e) To present and interpret data for management
planning, decision making and control.
(f) To help in the implementation of budgets and
implementation of budgetary control.
(g) To guide management in the formulation and
implementation of incentive bonus plans based on
productivity and cost saving.
(h) To organize cost reduction programmes with the
help of different department managers.

10. Costing- An aid to management
1. planning:
In which we plan what to do, how to do, and when
to do etc.
2. Decision making:
(a) Fixation of price (b) price should be reduced or
increased in future (c) whether new products
introduced in the markets (d) whether the
products should be exported or not.

11. 3. Controlling:
Compare actual performance with the planned
performance.
(a) Classification and sub-divisions of cost
(b) Control of material, labor and overhead cost
(c) Business policies
(d) Budgeting
(e) Standard for measuring efficiency
(f) Best use of limited resources
(g) Instruments of management control
(h) price determination

12. 1. Scope:
The scope of mgt accounting broader than the
cost accounting. Cost accounting provides only
cost information but management accounting
provides all type accounting information.
2. Emphasis:
In cost is focus on the cost information and in
management main emphasis on decision
making
Difference between Cost and
Management Accounting

13. 3. Techniques employed:
The various technique used by cost accounting such
as budgetary control etc. management accounting
also used these techniques but also addition ratio
analysis, funds flow statement, statistical analysis
and operation research etc.
4. Purpose:
The main purpose of cost accounting is the
reporting of cost (actual and predetermined) of
products services, jobs, processes, departments etc.
Mgt accounting use in formulation of policies,
planning, controlling, decision making etc.

14. 5. Evolution:
The evolution of cost accounting is mainly due to
the limitations of financial accounting and
evolution of management accounting is an
extension of managerial aspects of cost accounting.
The scope of management accounting is wide and
broad based.

15. Difference between cost and
financial accounting
1. Providing information:
Financial accounting concern with the profit and
loss and financial position of the business. It
provide information to owner and outsiders.
While management accounting provide
information to management for proper planning
operations, control and decision making.

16. 2. Reports:
F.A reports operating results and financial position
usually at the end of year.
C.A gives information through cost reports to mgt as
and when desired.
3. Stocks:
In financial accounting stocks are solved at cost or
market price and in cost accounting stocks are
valued at cost.

17. 4. Dealing:
Financial accounts deal mainly with actual facts and
figures. Cost accounts partly deal with the actual
facts and figures and partly with estimates.
5. Using:
In financial accounting only monetary information
used (i.e. only monetary transactions are recorded)
In cost accounting non monetary like units is also
used (i.e. it deals with the monetary and non
monetary transactions)

18. Relationship of cost departments to
others departments
1. The manufacturing departments:
2. The personnel departments interviews:
3. The treasury department:
4. The marketing departments:
5. The public relation departments:
6. The legal departments: