Difference between Financial, Cost and Management accounting
| FINANCIAL ACCOUNTING | MANAGEMENT ACCOUNTING | |
| PRIMARY USERS | External( Investors, government authorities, creditors) | Internal(Managers of business, employees) |
| PURPOSE OF INFORMATION | Help investors, creditors, and others make investment, credit, and other decisions | Help managers plan and control business operations |
| TIMELINES | Delayed or historical | Current and future oriented |
| RESTRICTIONS | GAAP FASB AND SEC | GAAP does not apply, but information should be restricted to strategic and operational needs |
| NATURE OF INFORMATION | Objective, auditable, reliable, consistent and precise | More subjective and judgmental, valid, relevant and accurate |
| SCOPE | Highly aggregated information about the overall organisation | Disaggregated information to support local decisions |
| BEHAVIOURAL IMPLICATIONS | Concern about adequacy of disclosure | Concern about how reports will affect employees behaviour |
| FEATURES | Must be accurate and timely Compulsory under company law Is an end in itself | Usually approximate but relevant and flexible Except for few companies, it is not mandatory Is a mean to the end |
| SEGMENTS OF ORGANISATION | It is primarily concerned with reporting for the company as a whole. | Segment reporting is the primary emphasis. |
| FINANCIAL ACCOUNTING | COST ACCOUNTING | |
| OBJECTIVE | It provides information about financial performance and financial position of the business. | It provides information of ascertainments of costs to control costs and for decision making about the costs. |
| NATURE | It classifies records, presents and interprets transactions in terms of money. | It classifies, records, presents and interprets in a significant manner materials, labour and overhead costs. |
| RECORDING OF DATA | It records historical data. | It records and presents estimated, budgeted data. It makes use of both historical costs and predetermined costs. |
| USERS OF INFORMATION | External users like shareholders, creditors, financial analysts, government and its agencies,etc. | Used by Internal management at different levels. |
| ANALYSIS OF COSTS AND PROFITS | It shows profit/loss of the organization. | It provides details of costs and profit of each product, process, job,etc. |
| TIME PERIOD | They are prepared for a definite period, usually a year. | They are prepared as and when required. |
| PRESENTATION OF INFORMATION | A set format is used for presenting financial information. | There are no set formats for presenting cost informations. |
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