Financial Accounting. It is the branch of accounting that helps to compute the cost of product and production in general. It is mainly accountable for fixed costs, overhead expenses, capital costs, selling price, etc. It is the branch of accounting that involves recording financial transactions effectively.
In turn, it facilitates the process of analysing the financial standing and profitability of a firm in an accounting period. It accounts for cost per unit of products. It represents the financial position of a firm accurately.
Relative Efficiency. It provides valuable information about efficiency. It is not useful in determining the relative efficiency of workers, machinery, etc. Reporting Time. It is frequently prepared and monitored accordingly. It is reported mostly at the end of an accounting period. Budgeting makes forecasting possible. It cannot be forecasted. Profit measurement. It only measures the profitability of a product or a service. It helps to measure the overall profitability of a firm.
Stock Valuation. It always takes into account the cost price of inventories. It always takes into account either the cost or market price. Learn more about the difference between cost accounting and financial accounting and other related topics in details from Vedantu App. Our study material and interactive live classes will not just benefit your subject knowledge but will, in turn, help you to prepare for your board examination more effectively.
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.
Cost accounts record expenses by elements, functions, variability, departments, and so on, to study them analytically. However, cost accounts do this for all expenses to disclose the per-unit cost at all stages of production. Dissimilarly, cost accounts deal with facts as well as estimates, as a result of which the data in cost accounts do not always tally with those in financial accounts.
Cost accounts, on the other hand, contain full information relating to all types of wastage incurred during production. However, cost accounts, despite being important and advantageous, need not be maintained.
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