Similarities and Dissimilarities Financial Accounting vs Cost Accounting
Both financial and cost accounts are the branches of accounting.Although their objective ar different yet their methods are one and the same and they are connected with each other.Both the system of accounting are adopted om various organization or undertaking .The objective of financial accounting is to show the financial position of the organization.while the objective of cost accounting is to determine and control the cost.
These system of accounting are not competitive but are complementary to each other yet there are certain similarities and dissimilarities.
similarities financial accounting vs cost accounting
As both the system are the parts of general accounting similarity in them is quite natural.
Dissimilarities financial accounting vs cost accounting
Objective : The objective of financial accounting is to disclose the financial position of the business while the objective of cost accounting is to find out control the cost of the products manufactured by a business concern.
Scope : The financial accounts are maintained by all the business industrial and other organization while cost accounts are maintained only in those oraganisation which are either involved manufacturing activity or are providing services.Thus scope of financial accounting is wider than the cost accounting.
Nature of accounting Transaction : In financial accounting all the financial or monetary transaction whether directly concerned with business or not are recorded while in cost accounting only those transaction which are related to production or services are recorded. Thus income tax interest dividend donation etc are not recorded in cost accounting because these are not at all related to production or rendering of services.
Necessity of Accounts:
For ascertain tax every organisation maintain financial accounts while maintenance of cost accounts is essential for certain specific manufacturing companies as explained in section 209(1) D of the company act.
Audit : Audit of financial accounts is compulsory in the case of all joint stock companies while in case of cost accounts it is not compulsory in all companies Sec 233 B of the companies Act 1956 has made cost audit compulsory in certain specified companies to be notified by the central government from time to time
Figures : Financial accounting deal with actual figures and facts while cost account deal partly with facts and figures and partly with estimates.
Analysis of Profit and loss Accounts : Financial accounts reveals the profit and loss of the entire business while cost accounts shows separately the profit or loss of each job product or process.
Determination of sale Price :A financial accounting does not provide scientific basis for determination of sale price whereas sale price is determined more correctly and scientifically on the basis of cost accounting.
Period : Financial Accounts are usually prepared for one year period whereas cost accounts being of internal importance of the organisation are also prepared monthly quarterly or for any other period as per requirement of the organisation or undertaking.