Question

Compare and contrast cost accounting vs. financial accounting.

Answer 1

COST ACCOUNTANTING

Cost accounting is a method of accounting used to calculate, record and analyse the cost incurred during the production of goods. Cost accounting is defined as a system set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing a service in a aggregate and in detail.

FINANCIAL ACCOUNTING

Financial accounting is a set of activities related to recording,summarising, analysis and reporting of financial transactions related to a business . Financial accounting is defined as bookkeeping of the financial transactions by classifying, analysing, summarising and recording financial transactions like sales ,purchasing etc and finally preparing the financial statements

DIFFERENCE BETWEEN COSTING ACCOUNTING AND FINANCIAL ACCOUNTING

* users

Cost accounting is mainly used by management to find out cost of the product and services . So it has internal use only

Financial accounting is mainly used by internal and external users . The uses of financial statements prepared in financial accounting includes creditors, investors bank, top management, analyst etc

* statements formate

Cost accounting reports doesn't require any specific formate

Financial accounting statements are prepared by specific formate mandated by generally accepted accounting principles

* purpose

Costing accounting is used to find out the cost of product and services

Financial accounting is used to find the financial position of a company

Processes

Cost accounting processes involves cost of sold, cost of goods manufactured, determination selling price etc

Financial accounting involves journal entries, ledger account trail balance and financial statements

The above are the detailed explanation and deference between cost accounting and financial accounting