Question

Please answer all the questions clearly and accurately with high charting the tables on the subject

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Explain the difference between Financial Accounting and Cost Accouning

Answer 1

Followings are the major difference between financial accounting and cost accounting.

	Cost Accounting	Financial Accounting
Meaning	Cost accounting is an accounting system which aims at recording companies manufacturing cost by evaluating all the input and fixed cost related to manufacturing.	Financial accounting is an accounting system which aims at recording, summarizing and reporting of all the economic activity of the company. Such as sales made to customer, purchases, expenses paid etc.
Measurement	Generally items (e.g. Stock) are measured at cost under cost accounting system.	Under financial accounting items (e.g. Stock) are generally measured at lower of cost or fair value.
Gain and Loss analysis	Generally gains or loss in cost accounting system are determined at batch level, job level, cost centre level etc.	Generally gain or loss in financial accounting are determined at enterprise level.
Target users	Purpose of cost accounting system is to give insight to the management of enterprise which may help in cost control, cost reduction, efficiently evaluation etc.	Purpose of financial accounting system is to give stakeholders (like investors, lenders, employees etc) information about financial position of the enterprise.
Reporting year	Generally reporting under cost accounting is done for a specific period determined by the management.	Generally reporting period under financial accounting is calendar year or financial year, which is determined by the statutory body of the state.
Reporting form	Reporting forms are determined by the management like margin statement, inventory report etc.	Generally the reporting form are fixed like, profit and loss statement, balance sheet, cashflow statement.