Difference between cost accounting and financial accounting

 

BASIS FOR COMPARISON	COST ACCOUNTING	FINANCIAL ACCOUNTING
Meaning	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.
Information type	Records the information related to material, labor and overhead, which are used in the production process.	Records the information which are in monetary terms.
Which type of cost is used for recording?	Both historical and pre-determined cost	Only historical cost.
Users	Information provided by the cost accounting is used only by the internal management of the organization like employees, directors, managers, supervisors etc.	Users of information provided by the financial accounting are internal and external parties like creditors, shareholders, customers etc.
Valuation of Stock	At cost	Cost or Net Realizable Value, whichever is less.
Mandatory	No, except for manufacturing firms it is mandatory.	Yes for all firms.
Time of Reporting	Details provided by cost accounting are frequently prepared and reported to the management.	Financial statements are reported at the end of the accounting period, which is normally 1 year.
Profit Analysis	Generally, the profit is analyzed for a particular product, job, batch or process.	Income, expenditure and profit are analyzed together for a particular period of the whole entity.
Purpose	Reducing and controlling costs.	Keeping complete record of the financial transactions.
Forecasting	Forecasting is possible through budgeting techniques.	Forecasting is not at all possible.