Contrast on Financial Accounting and Cost Accounting

Question

Describe a brief contrast on the term ‘Financial Accounting’ and ‘Cost Accounting’?

Answer 1

Financial Accounting preserves the interests of the outsiders dealing with the organization illustration shareholders, creditors and so on. However a report of Cost Accounting is employed for the internal reason by the management to facilitate the same in discharging different functions in an appropriate method.

2) Maintenance of Financial Accounting records and preparation of financial statements is a lawful need while Cost Accounting is not a lawful need.

3) Financial Accounting is concerning the computation of profits and state of affairs of the organization as entire while Cost accounting deals in cost ascertainment and computation of profitability of the individual products, departments and so on.

4) Financial Accounting considers only transactions of historical financial nature while Cost Accounting considers not only historical data however also future events.

5) Financial Accounting reports are made in the standard formats in accordance with GAAP while Cost accounting information is reported in whatsoever form management needs.