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Question :

What is difference between cost accounting and financial accounting?

Posted by: ashish kumar on 8/28/2013


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Category Cost Accounting Interview Questions
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Added on 8/28/2013
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Question :

What is difference between cost accounting and financial accounting?


Answer:

One of the basic differences cost accounting is helpfully in controlling the cost of production whereas financial accounting is concerned is helpfully in determining financial position of a concern .
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Posted by: rahim

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The difference between "cost accounting" and "financial accounting are terms refer to the accounting techniques used internally by a company's management to determine the costs of running the business and help in decision making. For example, reports that compare budgeted to actual expenses are commonly used to monitor the successful management of a specific department or store within a larger enterprise.
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Posted by: miki

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Cost Accounting means an accounting in which costs are ascertained by the organization in respect of its business activities and it is not used by the people external to the organization.It mainly helps in cost ascertainment and its control.

Financial Accounting is an accounting which helps in determining the financial position of firm.It gives the profit or loss of the firm for agiven period and does not help in controlling cost.
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Posted by: Rohit Kakkar

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cost accounting helps in finding out cost of a product and
control of cost.whereas financial accounting helps in
knowing the financial position of the business i.e is
profit or loss in a financial year.
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Posted by: C# (Sharp) Programming

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cost accountancy helps in controlling the cost of a product
&determines the cost of aproduct
for 1unit this method of accounting is in demand as it discusses about cost of a product
it is of two types-
1costing methods -eg cost sheet,contact costing, process costing, unit out put costing
2. costing techniques - marginal costing, standard costing
managment acconting - plays a very
imp role in the market as it discusses about planning, decession making, projections&implementations
" both accountings are more esential for effctive business
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Posted by: ravindra

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cost accounting is helpful to know the production where as financial accounting is helpful to know the financial positions of the concern
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Posted by: ahmed mohammad bashwar

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big difference but both have senchronization with each other in costing we find the cost of the particular business and in financial accounting position of a company shown if costing done better then inancial possition will good.
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Posted by: hafsa

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cost accountuing is job undertaken by firm.financial accounting is concerned with recording of business transaction in the books of account.
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Posted by: NEHA SHAW

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yes sir, the main differences between cost accounting and financial accounting is in cost accounting we are preparing cost sheets to know the cost price of one units produce where as in financial accounting we are preparing financial statement to know the profitability and financial position of business.
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Posted by: chandu

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cost accounting is job undertaken by a company & financial accounting is recording transection in the company books
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Posted by: preeti

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The main purpose of cost accounting is to identify, record and report to the management the costs related with the products or services in order to help them in making decisions about controlling costs and fixing selling prices.
Whereas the main objective of Financial accounting is to identify, record and report to the stakeholders the financial operations carried on by the enterprise and its financial position as on a given date.
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Posted by: Shubhi

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Chosen by Voters
Accounting is a set of concepts and techniques that are used to measure and report financial information about an economic unit. The economic unit is generally considered to be a separate enterprise. The information is potentially reported to a variety of different types of interested parties. These include business managers, owners, creditors, governmental units, financial analysts, and even employees. In one way or another, these users of accounting information tend to be concerned about their own interests in the entity. Business managers need accounting information to make sound leadership decisions. Investors hold out hope for profits that may eventually lead to distributions from the business (e.g., "dividends"). Creditors are always concerned about the entity's ability to repay its obligations. Governmental units need information to tax and regulate. Analysts use accounting data to form their opinions on which they base their investment recommendations. Employees want to work for successful companies to further their individual careers, and they often have bonuses or options tied to enterprise performance. Accounting information about specific entities helps satisfy the needs of all these interested parties.

The diversity of interested parties leads to a logical division in the discipline of accounting: financial accounting and managerial accounting. Financial accounting is concerned with external reporting of information to parties outside the firm. In contrast, managerial accounting is primarily concerned with providing information for internal management. You may have some trouble seeing why a distinction is needed; after all aren't we just reporting financial facts? Let's look closer at the distinctions.

FINANCIAL ACCOUNTING: Consider that financial accounting is targeted toward a broad base of external users, none of whom control the actual preparation of reports or have access to underlying details. Their ability to understand and have confidence in reports is directly dependent upon standardization of the principles and practices that are used to prepare the reports. Without such standardization, reports of different companies could be hard to understand and even harder to compare. As a result, there are well organized processes to bring consistency and structure to financial reporting. In the United States, a private sector group called the Financial Accounting Standards Board (FASB) is primarily responsible for developing the rules that form the foundation of financial reporting. With the increase in global trade, the International Accounting Standards Board (IASB) has been steadily gaining prominence as a global accounting rule setter.

Financial reports prepared under the generally accepted accounting principles (GAAP) promulgated by such standard setting bodies are intended to be general purpose in orientation. This means they are not prepared especially for owners, or creditors, or any other particular user group. Instead, they are intended to be equally useful for all user groups. As such, attempts are made to keep them free from bias (neutral).

MANAGERIAL ACCOUNTING: In sharp contrast to financial accounting, managerial accounting information is intended to serve the specific needs of management. Business managers are charged with business planning, controlling, and decision making. As such, they may desire specialized reports, budgets, product costing data, and other details that are generally not reported on an external basis. Further, management may dictate the parameters under which such information is to be accumulated and presented. For instance, GAAP may require that certain research costs be deducted immediately in computing a business's externally reported income; on the other hand, management may see these costs as a long-term investment and stipulate that internal decision making be based upon income numbers that exclude such costs. This is their prerogative. Hopefully, such internal reporting is being done logically and rationally, but it need not follow any particular set of guidelines.





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Posted by: KADZAHLO, DANIEL A FLY

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Cost accounting is for computing cost of product or service while finance accounting relates to preparing the details for nowing Profit or loss for particular perid and knowing financial position of organisation at particular point of time
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Posted by: Pankaj Srivastava

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Cost Accounting is a process of finding unit cost and also cost control and cost reduction.whereas Financial Accounting helps us to find profitability and actual position of business.
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Posted by: Arvind Sharma

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financial accounting focus on external reporting &guided by by GAAP.While cost accounting is measuring &reporting financial &non financial information related to the acqusition and utilization of resources.
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Posted by: dereje

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In cost accounting,with the help of cost sheet we are easy to find out cost per unit, cost of prodution & cost of goods sold. with the help of cost sheet, the company has to decied the m.r.p. of the that makes the profit.
In case of financial accounts, with the help of financial statement we determine profit or loss of the company & also know the financial position of the company.
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Posted by: Dipesh

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