Difference Between Cost Accounting and Financial Accounting
Basis |
Cost Accounting |
Financial Accounting |
---|---|---|
Objective |
Cost accounting provides with ascertainment of cost for the purpose of strategic decision making and deciding the price of product or service. |
Financial accounting provides information about financial performance of any business to its stakeholders. |
Recording of Data |
It records both historical and pre-determined costs. |
It records historical data. |
Main Analysis |
It provides the user with basic cost details like process cost, operation cost, job cost, etc. |
It provides the profit and loss of the business, either individually or as a whole. |
Timeline of Preparation |
Cost records are prepared as an when required by management, authorities or stakeholders. |
Financial records are prepared every year, after the end of financial year. |
Users of Information |
Main users are internal management, but sometimes might be required by stakeholders and government authorities. |
Creditors, shareholders, government authorities, banks, etc. |
Set of Guidelines Followed |
Cost principals, cost rules and cost standards are followed while drafting cost records. |
Accounting standards or Indian accounting standards are followed. |
Valuation of Stock |
Valuation is always done at cost. |
Valuation of stock is based on cost or net realisable value whichever is lower. |