Cost Accounting

vs
Financial Accounting
 COST ACCOUNTING
A method of accounting in which all costs incurred in carrying out an activity or
accomplishing a purpose are collected, classified, and recorded.
This data is then summarized and analyzed to arrive at a selling price, or to
determine where savings are possible.
In contrast to financial accounting (which considers money as the measure of
economic performance) cost accounting considers money as the economic factor
of production.
 FINANCIAL ACCOUNTING
Financial accounting is a specialized branch of accounting that keeps track
of a company's financial transactions.
It's important to point out that the purpose of financial accounting is not to
report the value of a company. Rather, its purpose is to provide enough
information for others to assess the value of a company for themselves.
Because external financial statements are used by a variety of people in a
variety of ways, financial accounting has common rules known
as accounting standards and as generally accepted accounting principles
(GAAP).
 DIFFERENCE B/W
COST ACOUNTING
AND
FINANCIAL ACCOUNTING
 BASIS COST FINANCIAL
ACCOUNTiNG ACCOUNTING

MEANING Cost Accounting is an accounting Financial Accounting is an

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

WHICH TYPE OF Both historical and pre-determined Only historical cost.

COST IS USED cost
FOR
RECORDING?
Cost or Net Realizable Value,
VALUATION OF
STOCK At cost whichever is less
No, except for manufacturing firms it Yes for all firms.
MANDATORY is mandatory.
 KEYWORDS
Cost accounting
Financial accounting
Accounting standards
Generally accepted accounting principles
Historical cost and Predetermined cost
Net Realizable Value
THANK YOU
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