Draw out a distinction between Cost Accounting and Financial Accounting.

Question 33 of 85

Q. Draw out a distinction between Cost Accounting and Financial Accounting.

ChseodishaCHSE Odisha Plus Two (Class 12) Commerce Board 2020Subjective· 8mImportance★★★★★est

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Cost accounting is internal, cost-focused and voluntary; financial accounting is external, result-focused and statutory.

Distinction between Cost Accounting and Financial Accounting

Basis	Cost Accounting	Financial Accounting
Purpose	To ascertain, analyse and control the cost of products/services	To record all transactions and show overall profit/loss and financial position
Users	Mainly internal management	External parties - owners, investors, creditors, government
Statutory status	Generally voluntary (compulsory only for certain industries)	Legally compulsory for most businesses
Nature of information	Detailed, cost/product/process-wise; part estimates & standards	Overall monetary results; historical and factual
Period	Reported frequently (daily/weekly/monthly) as management needs	Usually prepared yearly
Data recorded	Both monetary and non-monetary (units, hours, quantities)	Only monetary transactions
Stock valuation	At cost	At lower of cost or net realisable value
Focus	Cost control and decision making	Reporting results and financial position

Q.Draw out a distinction between Cost Accounting and Financial Accounting.