Last updated on December 16th, 2019 at 05:20 pm
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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. |
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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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