Difference Between Financial Accounting And Cost Accounting

According to Epstein and Buhovac, (2014), costing system is a process designed to monitor the costs incurred in a certain business. Costing systems are meant to advise the management on how to choose the most appropriate course of action with cost efficiency and capability. According to Cardinaels and Labro (2009) costing system provides detailed cost information needed by management needs to control current operations with the aim of improving the future. Below are some of the costing systems that are common to many organizations (Epstein & Buhovac, 2014).

A continuation of Accounting Principles I & II, Managerial Accounting concentrates on the development and analysis of accounting information for managerial planning and control.  Looking at the accounting information needs inside a company, this course covers the concepts of cost accumulation, cost behavior patterns, cost-volume-profit relationships, profit planning, budgeting, pricing decisions and capital decisions.  Students completing this course are expected to be able to differentiate between financial and managerial accounting and apply managerial accounting concepts to internal financial decision making scenarios. In addition to learning about accounting information, students will be expected to perfect their learning, thinking, communication and teamwork skills.

 Financial accounting is an information-processing system that generates general-purpose reports of financial operations (income statement and statement of cash flows) and financial position (balance sheet) for an organization. It is used by decision makers inside and outside the firm, such as security investors, analysts, and lenders. Adding to this external orientation are external financial reporting requirements determined by law and generally accepted accounting principles.

However, the function and the objective of cost accounting is similar to management accounting. Hence sometime authors refer to management accounting and cost accounting as the same.

Accounting and finance are closely related to a certain extent in which both deal with the financial aspects of a company. Accounting and finance work together in creating “a company’s budget or working capital analysis” (Wise-Geek, 2012, p. 1). Accounting involves recording of an organizations operations of a business as well as showing the information in the outline profit and loss accounts, which demonstrates the gain or loss of the organizations throughout the year. In addition, accounting includes provisions of a balance sheet replicating the monetary positions of a business at a specific time period. It should provide clear and precise figures about the proprietary and financial condition in a

The management of the cost of the company's product is an important part, which a cost accountant has to deal with. The profit of the company depends on the extent of the control on the production cost of the product. As the increase in sales and the profitability is the main aim of the management, so it will attract more conflicts of views and multiple sources of actions. A cost accountant has work in this direction and clears the things to the management so that they can have appropriate decisions with regard to the product, its costs and the company's profits at

The main purpose of financial accounting is to prepare financial reports that provide information about a firm’s performance to external parties such as investors, creditors, and tax authorities. Must be performed according to GAAP (Generally Accepted Accounting Principles) guidelines.

Accounting is the heart and soul of executing a successful business. Accounting is used to provide record for all items that are paid and received for a business over any period of time. Within the purpose of accounting lies the need to provide continuity and sustainability within a business, without it a business will not thrive. The information obtained is kept on record, in order to give insight to upper management on data concerning the daily revenue and expenses of that business. This data is needed to not only inform the employees of the business, but also the investing parties of that business as well. Success in business is equated to being accountable of all aspects of revenue and expenses. To

c. Financial management involves the measurement, in financial terms, of operational events that affect the resources and financing of an organization.

Objective: Explain how cost accounting systems are used to determine the cost of a product, service, customer, or other cost objective.

Costing system is the most important part for any business or engineering company. Cost accounting is necessary for a company to be able to exercise control over the actual costs incurred compared with planned expenditure. From the point of view of cost control, a costing system should not only be able to identify any costs that are running out of control but should also provide a tool that can assist in determining the action that is required to doing right things.

Financial accounting is a crucial process for any successful business. Atrill and McLaney, 2013 define financial accounting as: “the identification, measurement and communication of accounting information for external users (those users other than the managers of the business).”

A major difference between financial accounting and managerial accounting is their differing uses in regards to present and future data for decision-making. Financial accountants prepare data from transactions that have already occurred and managerial accountants prepare statements in regards to future decision making for their company. According to countingtools.com, the economy is always changing and not everything can be predicted, therefore, managerial accounting could only be useful to a certain degree.

Cost accounting is concerned with cost and therefore is necessary to understand the meaning of term cost in a proper perspective.

Executive summary: This assignment deals with the evaluation and calculation of cost accounting. In this assignment, we will discuss about the different types of costs that is related with the company, different methods of cost evaluation, appropriate techniques of cost accounting, preparation of routine cost report, to Use performance indicators to identify potential improvements, improvements to reduce costs, enhance value and quality, the purpose and nature of the budgeting process in business, appropriate budgeting methods for organization, Preparation of budgets according to the chosen budgeting method, Preparation of cash budget, Calculation of variances, identify possible causes and recommend corrective action etc.