Financial Accounting and Cost Accounting are two distinct branches of accounting. They have different objectives and focus on different aspects of the business. Financial Accounting reports the financial performance of a company while Cost Accounting helps to identify costs associated with production. This article will explain the differences between these two types of accounting.
About Difference Between Financial Accounting And Cost Accounting
| Financial Accounting | Cost Accounting |
|---|---|
| Records transactions & prepares financial statements | Analyzes costs of production/services |
| Focuses on past performance | Evaluates current operations |
| Measures profitability for external users | Helps internal management make decisions |
| Provides information to tax authorities | Uses budgets and standard costs |
| Based on GAAP principles | Concerned with minimizing costs |
| Emphasizes objectivity & accuracy | Stresses relevance & flexibility |
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