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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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