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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.
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