For fulfilling all business functions and objectives, the management accounting cost data receives wild information from the cost accounting itself. Cost accounting is the art of classification, analysis, and division. Thereby determining and controlling the cost of the item or service.
Management accounting is a method of accounting that is about planning and controlling ongoing processes and giving factual information on management for decision-making in special cases.
So, It also stores, analyzes, and renders all types of accounting information useful for management accounting.
Hence, cost accounting is a part of financial accounting.
Cost Accounting Vs Management Accounting
The following are the main difference between cost accounting and management accounting:
1. Development
Cost accounting is the responsibility of the industrial revolution, it was developed at the beginning of the twentieth century.
Management accounting is a modern age, it has been developed in the past five decades.
Financial Accounting Vs Management Accounting
2. Purpose
The main purpose of cost accounting is to determine the cost of the item or service. But currently, cost analysis, and cost-wise assessment for cost control decisions is also the purpose of cost accounting.
But, the purpose of managing accounts is to provide the managers with the necessary accounting information to efficiently execute their managerial tasks.
3. Scope
Cost accounting is only related to cost data, hence it is only part of management accounting.
The area of management accounting is very large, it involves financial accounting, cost accounting, budgeting, tax planning, management information, and other aspects of financial management.
4. Nature
It is related to past and present events, so it is used in both past and present data.
Thus, It is primarily related to the projection for the future, so this cost is of a much more predictive nature than cost accounting.
5. Planning
Cost accounting is related to short-term planning. Management accounting is related to short-term and long-term planning, and analysis uses techniques such as profitability reporting.
Cost accounting is also a branch of accounting.
The process of determining this cost and technical planning decision-making and control is the basic managerial task.
The cost accounting system provides essential equipment such as standard cost, budget control, and control, and marginal cost for the efficient completion of these tasks.
Thus, the objective of managing to account is to select such data from classification and analysis.
Which can help the management in its work and planning, operations, and control decisions.
6. Figures Used
Only those transactions or events are considered in cost accounting.
Those which can be expressed in the numbers, meaning that only the quantitative side is recorded.
But in management accounting, Both quantitative and qualitative information is used.
7. Cost Aspect
It is only about determining the division and distribution-related.
It is more related to the impact of costs.
So that is the main difference between cost accounting and financial management.
8. Basis of Principles
In cost accounting, Some of the principles and action methods are followed in order to record the needs of different products.
Therefore, In management accounting, No specific rules are followed in the reporting process of management accounting. Information is presented as per the expectation of management.
9. Calculations
In management accounting, all data and pieces of information are calculated as managing info.
It uses all management processes for that.
But cost accounting is following the costings of all resources and ideal expenditures financials and how to get value from these resources.
10. Utlizations
The main thing is to manage and utilize all the resources in a good and ideal way to get high productivity in business.
Thus, from these points now you know how both are connected to each other in different ways.
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