Financial Accounting and Cost Accounting

Question

Describe distinguish between the term Financial Accounting and Cost Accounting?

Answer 1

1) Financial Accounting keeps the interests of the outsiders dealing with the organization e.g creditors, shareholders and so on. While reports of Cost Accounting is employed for the internal point by the management to facilitate the same in discharging several function in a appropriate way.

2) Upholding of preparation of financial statements and Financial Accounting records is a lawful prerequisite while Cost Accounting is not a lawful requirement.

3) Financial Accounting is concerned regarding the computation of profits and conditions of the organization as entire while Cost accounting deals in cost ascertainment and computation of profitability of the departments, individual products and so forth.

4) Financial Accounting considers merely transactions of past financial nature while Cost Accounting considers not only past data however also prospect events.

5) Financial Accounting reports are made in the standard formats in accord with GAAP while Cost accounting information is reported in any form management desires.