Cost Accounting VS Management Accounting, Development of cost accounting is as a result of the limitations of financial accounting. 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 the 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.
For fulfilling all these functions and objectives, the management accounting cost data receives wild information from the cost accounting itself.
Hence, cost accounting is a part of financial accounting.
Difference between Cost Accounting and Management Accounting
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 four decades.
Management Accounting Vs Financial Accounting
2. Purpose
The main purpose of cost accounting is to determine the cost of the item or service. But currently cost analysis, cost-wise assessment for cost control decisions is also the purpose of cost accounting.
Thus, the purpose of managing to account is to provide the managerial 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 the 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.
Related: Top 8 Importance and Advantages of Management Accounting.
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 much more predictive nature than cost accounting.
5. 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. The final Differences – Cost Accounting VS Management Accounting are below.
6. 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 top difference between cost accounting and financial management.
7. 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.
Related: Balance of Payments (BOP): Concept, Components, Importance.
8. 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, control, the marginal cost for 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, control decisions?
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