Difference Between Cost Accounting and Financial Accounting

Cost accounting and financial accounting are two different branches of accounting. In order to understand the differences better, the following table will help greatly.

Financial Accounting Cost Accounting
It is used to record financial transactions and is used to know the financial position of the company. It is used to control cost and to improve efficiency in the operations.  
It is used to record assets, equity and liabilities according to the applicable accounting standards.   It is used to classify cost into the direct material, direct labour and FOH (Factory Overhead).
Financial accounting works around prescribed rules and regulations.   Cost accounting does not follow any set rules and standards.
Financial statements are necessary to be prepared under the corporate law.  Various types of reports are prepared on the discretion of the management. But there is no hard and fast rule to prepare certain types of reports. 
Financial Accounting is a great tool for the management to decide over the matters such as reducing gearing of the company and to increase market share of the company. Cost accounting targets cost control by using methods of over allocation, standard costing, process costing etc.  
Financial statements are demanded by the tax authorities, Governments, Banks, Customers and suppliers.  Cosr accounting reports are required by the management for decision making. 
External auditors are hired for expressing their views over the financial position and performance of the company and the true and fair view of the financial statements.  Internal auditors are appointed to check the efficiency and effectiveness of the management accounting system.
   
   

 

Contents
Financial Ratios Accounting Cycle Accounting Principles Financial Accounting Basics Financial Statements Reporting Bad Debts Current Assets Long-term Assets Voucher System Partnership Depreciation Work Sheet - 10 Column Work Sheet Difference Between Reserve and Fund Accounting for Leases Capital reduction and reconstruction Absorption of Company Amalgamation Accounting for Installment Sales Basis of Recording Profit and Loss Branch Accounting Construction Contracts Revenue Recognition Accounting for Groups Financial Analysis Events After the Balance Sheet Date Deferred Tax Cost Accounting Difference Between Cost Accounting and Financial Accounting Objectives of Cost Accounting Scope of Cost Accounting Classification of Costs Methods of Costing Absorption Costing Pre-determined Overhead Rate Over/ Under Absorbed Overheads Marginal Costing Advantages, Benefits, Pros of Absorption Costing Disadvantages/ Drawbacks of Absorption Costing Advantages of Marginal Costing Disadvantages of Marginal Costing Joint Product Costing Process Costing Practical Difficulties in Installing a Cost Accounting System Elements of Cost Re-Ordering Level Economic Order Quantity EOQ Danger Level Minimum Level Stock Maximum Stock Level Bin Card Stores Ledger Uniform Costing Cost Ratios Benefits of Minimum Stock Level Cost Accounting MCQS - Multiple Choice Questions Multiple Choice Questions on Cost Classification Activity Based Costing (ABC) Throughput Accounting Relevant Cost Break Even Analysis Standard Costing Inventory Management Payroll Accounting Royalty Accounting Statistics Master Budget Salary Income Microsoft Excel Tutorial Other Topics Share or Stock Valuation Model Financial Management Topics Kinds of Endorsement Letter of Credit, Kinds and Its Advantages/ Utilities Modern Functions of a Commercial Banks Difference Between Secured And Unsecured Loan Excel conditional formatting red if negative green if positive How to Remove Extra Spaces in Excel Result Card or Result Sheet Creation Using Excel Basic Accounting MCQS Multiple Choice Questions