Differentiate between Cost Accounting and Financial Accounting?
Answer:
Cost accounting deals with the cost( fix , variable and overhead) associated with the processing of a product in order to maximize profit or break even. Most manufacturing companies deals with cost accounting. In Financial accounting its deals with looking at the companies overall well being financially through its financial statements such as balacing sheet , trial balance and cash flow statements.
Financial accounting deals with how to account for financial transactions. Cost accounting deals with how to value those transactions, generally as it relates to determining costs/expenses of a product.
The purpose of Financial Accounting to provide information for people outside of an organisation, for example the government and shareholders. For this reason there are strict rules for exactly how it must be done.
Management accounting, of which cost accounting is a big part, is for the purpose of providing information for people inside a business. So therefore there are no real rules for how it must be done.
Financial accounts are normally prepared yearly, whereas costing or management account are done regularly.
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