Accounting subject has two major components: Cost Accounting and Financial Accounting. The first and the simplest difference between the two is that cost accounting is done for insiders like the management and financial accounting is done for outsiders like the investors, government etc. Further as go deeper in the development of reports concerning the two, we find that cost accounting does not rely upon any standard reporting formats whereas financial accounting stick to the mandatory accounting principles.
Basic Differences between Cost & Finance Accounting
Cost accounting is generally done prior to financial accounting. It is because the information compiled in cost accounting like the cost of raw materials, work-in-progress, finished goods inventory etc has to be incorporated in finals reports prepared through financial accounting. Financial accounting information is released at the end of the financial year only whereas cost accounting information can be provided at any time and when needed by the management. Cost accounting aims at reducing the cost of production and maximizing profits. On the other hand, financial accounting refers to the end results of the financial year depicting assets and liabilities of the company.
The information in cost accounting does not directly depend on the accounting system and can be gathered from outside sources also. On the other hand, financial accounting information depends solely on the accounting system. Cost accounting systems are not compulsory for all types of business except for manufacturing units. The financial accounting systems are mandatory for all types of businesses or firms. Forecasting of business can be done in cost accounting and not in financial accounting.
Cost accounting systems can be of two types. They are:
- Integrated Cost Accounting Systems: Here cost accounting data and the financial data are recorded in same sets of books.
- Non-Integrated Cost Accounting Systems: It is a system in which all types of cost accounting information are recorded in separate sets of books.
In cost accounting, profit analysis alone can be done concerned with a particular job, batch, process or product. In financial accounting, the income, expenditure and the profit can be analyzed together for a particular period of time in the financial year. Cost accounting helps a company to make decisions regarding the determination of the selling price of the products, controlling the cost of raw materials and operations, projections of the plans and their executions, efficiency of the workers in reducing the cost etc. Financial accounting specifies a particular period of accounting such as a financial year. It includes Income statements, cash flow statements and finally the Balance Sheet.
So, by studying above mentioned comparison between cost accounting and financial accounting it can be said that these two are the pillars of accounting without which a business cannot be imagined. Both are complementary to each other and no accounting is complete without the contribution of both. This difference should be clearly understood by a student of accounting in order to solve their assignments.
Best Cost Assignment Help from BookMyEssay
BookMyEssay is an online assignment help service provider that caters to the needs of students in solving their assignments. It has experts in every field who can write any type of assignments. As far as assignments pertaining to cost accounting and financial accounting are concerned, they are the best in the market.
Cost and Financial Accounting assignments need a clear understanding of the two types of accountings. A student must be aware of the differences between the two. It is very necessary to write a good assignment. BME can be a perfect guide and help when a student finds it cumbersome and confusing to write cost and financial accounting assignments. So it’s better to choose BookMyEssay for cost accounting assignment help because we have the experts in this field so that they can help you out easily.