What do you think is the main difference between Financial accounting and Cost Accounting?

Cost Accounting is an accounting system, through which an organization keeps the track of various costs incurred in the business in production activities.

Financial Accounting is an accounting system that captures the records of financial information about the business to show the correct financial position of the company at a particular date.

The difference between cost accounting and management accounting is very crucial as the users of both the accounting system are the internal management of the organization. So, it is sometimes believed that they are one and the same thing, but they are quite different from each other in many areas. If we talk about cost accounting, it has a quantitative approach, but the management accounting gives emphasis on both quantitative and qualitative data. So, take a read of the article provided to you which explain the difference between the two in tabular form.

FINANCIAL ACCOUNTING FOR EXTERNAL PURPOSES

WHEREAS MANAGEMENT ACCOUNTING IS FOR INTERNAL PURPOSES

FINANCIAL ACCOUNTING IS A STATUTORY REQUIREMENT 

WHEREAS MANAGEMENT ACCOUNTING IS NOT MANDATORY

- There are many differences between cost accounting and financial accounting, the most important of which are the following:

 

1. In terms of users of accounting information:

 

    Financial accounting is concerned with the provision and provision of accounting information to external parties such as investors, creditors, trade unions, etc., while accounting for costs by providing costs and accounting information to the administrative levels of the establishment.

 

2. Objectives:

 

    Financial accounting aims to provide data on the results of an entity's activity, financial position and cash flows. Cost accounting is concerned with providing cost information to internal parties such as management.

 

3. Data type:

 

   Financial accounting relies heavily on historical financial data, while cost accounting relies on historical and current financial data and data that can be inferred from future projections.

 

4. Type of reports:

 

   The report on financial accounting is presented in the form of a total, in which the accounting policies and standards used in the preparation of these reports are adopted. The cost accounting reports are analytical reports based on the administrative level of data and information on the costs of the production units.

 

5. Level of obligation:

 

      Financial accounting is mandatory by virtue of legislation and computer policies, while cost accounting is optional according to the management needs of accounting data and information.

 

thank for invite 

1- users 

financial accounts give info to department and partners 

cost accounts give info to department 

2-Goals

financial accounts make data for activity outcome and finance analysis and  financial centre

3-Data 

financial accounts historicald data 

cost accounts historical and expected data

4- reports

financial accounts write by accounting standards

cost accounting write for department needs

finally financial account must do 

but cost accounts as you need

What is the reason that a senior accountant is asking such a basic question about accounting?????

in my opinion ,, financial accounting is intended to provide the financial reports and statements , help a lot of users (internal and external users ) to determine a lot of analysis about the entity ,, such as solvency and liquidity ,, and it's already including inside it the cost accounting ,,

the cost accounting is very useful to know how much ur service or product will cost you , could help in pricing too , and cost reduction ,,

thanks 

Cost accounting compiles the cost of raw materia,work -in- process, and finished goods inventory,while financial accounting incorporates thus information into its financial report _Financial accounting orima focus on Reporting the results and financial pod of an entire business entity,cist accounting usually results in reports at s much higher level of detail within​ the company. _Fibancial accounting involves the preparation of a standard of set of reports fir sn outside audience

Thanks to the callagreed with answers dear colleagues.

The main difference in perspective of each type.

Financial Accounting is recording and Reporting Financial Transactions and Cost Accounting is Accumulating costs associated to products that are then analysed for price setting and budgeting purposes.

Another main difference is the reporting perspective where Financial Accounting  Reports (Financial Statements) are for external users but cost accounting reports contain crucial information and are not publicly available. 

Financial accounting has its focus on the financial statements which are distributed to stockholders, lenders, financial analysts, and others outside of the company. Whereas Cost accounting has its focus on providing information within the company so that its management can operate the company more effectively.