Register now or log in to join your professional community.
The relationship between cost accounting and financial accounting
Although there is considerable overlap between cost accounting and management accounting and the adoption of each and every one of them at Wal other part activities but in general, the main objective of cost accounting is a measure of the cost of production, which occurred in the previous period in order to determine selling and measuring the profit margin rates in addition to evaluating stocks last term . But this data is limited in order to assist the administration in planning, control and decision-making and this Matqqh management accounting through the data and information provided by senior management, which is based in most cases to the data provided by cost accounting. Also, management accounting concerned with future events, and this became tangible when you see the evolution system (ABM) and Honzam administration on the basis of the activities as well as a system (ABB) system budgets on the basis of activities.
Rules costing system design
1. cost units: a means by which to measure the different units of the cost depending on the nature of the activity is expressed in costs, whether productive activity Aonchat
There is a service units number, height, weight, area, volume, time, and this difference is due to the reasons are:
A-difference in the nature of the services provided.
(B) the multiplicity of products offered to consumers.
(C) the nature of Alamlyatalantegeh, marketing and professional.
As for the choice of unit costs there are controls governing the choice of which of them technical and practical because the absolute determination of these units will lead to inaccurate results and thus improper distribution expenses, the choice of
Unit cost is too small will lead to do big calculations and Baltalisov benefits envisaged to be less than the benefit costs, but that the selection of units very large cost will lead to rounding in the extraction results
2. Costs centers: know the simplest forms as the youngest part of the activity or area of responsibility, which accumulate faithful costs may be the place people as is the case in the student division or department or machines and other centers and integrated accounting system identified costs centers centers of production and service centers production and Mrakzaltsuiqih centers management and financing
Centers capitalist operations. The importance of identifying cost centers will enable to obtain cost figures accurately and help in the preparation of planning budgets can find a sound basis for allocation of expenses and achieving efficiency in the control of the project activity.
3. The cost elements: (cost items) is in the materials, wages, and expenses. Unified by the accounting system it has been dubbed the name uses elements.
4. Cost period: The time limit on the basis of costs and assembly for the purpose of Qils the cost of the product or service cost may be daily, weekly, monthly or semi-annual or annual depending on the nature of the activity.
5. Tgariralamserven and observers: be very short periods of time (daily, monthly)
And be quarterly rather than report the raw materials used in production, wages of workers, Tgariraelloukt Ordinary and Extraordinary lost.
There was special reports are periodic reports as reports of this activity was commissioned, the control of current activity reports, statistical reports.
There are special reports exceptional emergency Ktaqariran production stopped Mphajy.taqarir for unusual information, for example information on the storage material incorrectly or committees procurement problems, reports Storekeepers, reports replace the production line and these reports are very important because it addresses an extraordinary things and not routine.
Thanks for Invitation:
Difference between COST and FINANCIAL Accounting
Cost Accounting
It is the process of recording, analyzing and classifying of expenditure for the
purpose of product / departmental costing to assist cost control.
Financial Accounting
The branch of accounting concerned with classifying, measuring, and recording the transactions of a business. At the end of a period, usually a year but sometimes less, a profit and loss account and a balance sheet are prepared to show the performance and position of the business. Financial accounting is primarily concerned with providing a true and Financial Accounting view of the activities of a business to parties external to it. To ensure that this is done correctly considerable
Major Differences:
Principal objective
FINANCIAL ACCOUNTING - Stewardship of business for benefit of shareholders
COST ACCOUNTING – seek to improve economy Users of accounting information
Cost accounting – provision of information to managers to help them in decision-making, planning and control.
Financial accounting – provision of information to external users outside the business.
Report recipients:
FINANCIAL ACCOUNTING – External/outsiders namely the shareholders and government (tax)
COST ACCOUNTING – internal parties like directors and company managers Outputs
FINANCIAL ACCOUNTING - Summary (usually annual) -profit and loss
cost accounting simply measures the unit cost of producing financial accounting measure the all company work results.
The main function & objective of financial accounting is to prepare financial statements so internal & external stakeholders can have access to the entity's financial position. On the other hand cost accounting provides information to the management regarding the product costing , profitability analysis, controlling overheads so that decision for inclusion or exclusion of products can made.
Financial accounting is accounting concerned with the financial transactions of the entity any recording financial transactions of the entity, analyze, interpret, summarize and display the results on who is interested It aims to find out the rights and obligations and financial position of the entity and the result of the profit and loss and financial accounting aims to recognize the result of the activity established a total manner that does not take care of the details of production expenses and administration expenses
The cost accounting are concerned with cost analysis of Universal materials, wages and expenses of the other elements in order to determine and find out the cost of the product and thus determine the selling price
You can open an account for each type of goods in quantities and not the financial terms
Such as the expense of raw materials and goods under the operating expense and the expense of finished goods made
The Differences are as follows
Audience. Financial accounting involves the preparation of a standard set of reports for an outside audience, which may include investors, creditors, credit rating agencies, and regulatory agencies. Cost accounting involves the preparation of a broad range of reports that management needs to run a business.
Format. The reports prepared under financial accounting are highly specific in their format and content, as mandated by either generally accepted accounting principles or international financial reporting standards. Cost accounting involves creating reports that can be in any format specified by management, with the intention of including only that information pertinent to a specific decision or situation.
Level of detail. Financial accounting primarily focuses on reporting the results and financial position of an entire business entity. Cost accounting usually results in reports at a much higher level of detail within the company, such as for individual products, product lines, geographical areas, customers, or subsidiaries.
Product costs. Cost accounting compiles the cost of raw materials, work-in-process, and finished goods inventory, while financial accounting incorporates this information into its financial reports (primarily into the balance sheet).
Regulatory framework. The structure of financial accounting reports are tightly governed by either generally accepted accounting principles or international financial reporting standards. There is no regulatory framework governing cost accounting reports.
Report content. A financial report contains an aggregation of the financial information recorded through the accounting system. The information in a cost accounting report can contain both financial information and operational information. The operational information can come from a variety of sources that are not under the direct control of the accounting department.
Report timing. Financial accounting personnel issue reports only at the end of a reporting period. Cost accounting staff may issue reports at any time and with any degree of frequency, depending upon management's need for the information.
Time horizon. Financial accounting is only concerned with reporting the results of reporting periods that have already been completed. Cost accounting does this too, but also can be involved in a variety of projections for future periods.
The financial accounting is to record and report the financial events , and the cost accounting is to specify and measure the product cost
Many Thanks for invitation:
Below is answer:
Thanks for invitation
Financial accounting is concerned with the provision of information to external parties outside the organization while management accounting is concerned with the provision of information to people within the organization to help them make better decisions and improve the efficiency and effectiveness of existing operations.. Financial accounting reports describe the whole of the business while cost accounting focuses on small parts of the organization for example the cost and profitability of products,services, customers and activities. Information measures the economic performance of decentralized operating units, such as divisions and departments. In sort management accounting could be called internal accounting and financial accounting could be called external accounting.
Financial accounting is the field of accounting concerned with the summary, analysis and reporting of financial transactions pertaining to a business. This involves the preparation of financial statements available for public consumption. Stockholders, suppliers, banks, employees, government agencies, business owners, and other stakeholders are examples of people interested in receiving such information for decision making purposes.
Point of Differences
Financial Accounting
Cost Accounting
Meaning
Recoding of transactions is part of financial accounting. We make financial statements through these transactions. With the help of financial statements, we analyze the profitability and financial position of a company.
Cost accounting is used to calculate cost of the product and also helpful in controlling cost. In cost accounting, we study about variable costs, fixed costs, semi-fixed costs, overheads and capital cost.
Purpose
Purpose of the financial statement is to show correct financial position of the organization.
To calculate cost of each unit of product on the basis of which we can take accurate decisions.
Recording
Estimation in recording of financial transactions is not used. It is based on actual transactions only.
In cost accounting, we book actual transactions and compare it with the estimation. Hence costing is based on the estimation of cost as well as on the recording of actual transactions.
Controlling
Correctness of transaction is important without taking care of cost control.
Cost accounting done with the purpose of control over cost with the help of costing tools like standard costing and budgetary control.
Period
Period of reporting of financial accounting is at the end of financial year.
Reporting under cost accounting is done as per the requirement of management or as-and-when-required basis.
Reporting
In financial accounting, costs are recorded broadly.
In cost accounting, minute reporting of cost is done per-unit wise.
Fixation of Selling Price
Fixation of selling price is not an objective of financial accounting.
Cost accounting provides sufficient information, which is helpful in determining selling price.
Relative Efficiency
Relative efficiency of workers, plant, and machinery cannot be determined under it.
Valuable information about efficiency is provided by cost accountant.
Valuation of Inventory
Valuation basis is ‘cost or market price whichever is less’
Cost accounting always considers the cost price of inventories.
Process
Journal entries, ledger accounts, trial balance, and financial statements
Cost of sale of product(s), addition of margin and determination of selling price of the product.
Do you need help in adding the right keywords to your CV? Let our CV writing experts help you.