Difference Between Cost Accounting and Financial Accounting

Cost Accounting vs Financial Accounting

Meaning of Cost Accounting :

Cost accounting is an accounting system that aspires to capture an enterprise’s costs of manufacturing by evaluating the input costs of each step of manufacturing as well as fixed costs, namely, depreciation of capital equipment. Cost accounting will initially compute and document these costs separately, then analyse input outcomes to output or actual outcomes to assist the enterprise’s management in computing financial accomplishment.

Meaning of Financial Accounting :

Financial accounting is the procedure of documenting, encapsulating and reporting the multiple transactions resulting from trading operations over a timeframe. These transactions are compiled in the preparation of financial statements, comprising the income statement, balance sheet and cash flow statement, that record the enterprise’s operating accomplishment over a particular period.

This article is a ready reckoner for all the students to learn the difference between cost accounting and financial accounting :

Basis Cost Accounting Financial Accounting
 

Meaning

Cost accounting is an accounting system that aspires to capture an enterprises costs of manufacturing by evaluating the input costs of each step of manufacturing as well as fixed costs, such as depreciation of capital equipment.

Financial accounting is the procedure of documenting, encapsulating and reporting the multiple transactions resulting from trading operations over a timeframe.

Information Documents the data associated with the labour and material which are utilised in manufacturing procedure. Documents the data that are in monetary terms.
Estimation of Stock At cost Net Realisable value or Cost, which is less between these both factors.
Profit Analysis

Normally, the gains are investigated for a specified job, batch, product and procedure.

Profits, Income and expenditure are investigated together for a specific period of the entire trading concern.

Aim Controlling and reducing the cost. Maintaining the complete record of the financial transactions.

The above mentioned is the concept, that is elucidated in detail about ‘Difference Between Cost Accounting and Financial Accounting’ for the Commerce students. To know more, stay tuned to BYJU’S.