Differentiate between cost accounting and financial accounting.

The major differences between cost accounting and financial accounting are as follows −

Cost accounting

• Records information related to production activities.

• Records both historical and forecasted costs.

• Main objective is fix selling price of the product by calculating per unit cost.

• Both monetary and non-monetary transactions are recorded.

• Prepared whenever is necessary.

• Not necessary to prepare any statements for public.

• No specific format.

• Forecasted using budgeting technique.

• Stock is valued at cost.

Financial accounting

• Records information which are financial in nature.

• Records only historical cost.

• Main objective is to assess the profitability and financial position.

• Only monetary transactions are recorded.

• Prepared at the end of accounting period.

• Public companies prepared as a part of financial accounting.

• Not possible to forecast financial accounting.

• GAAP and IFRS principles are used.

• Stock is valued at market price or cost, whichever is less.