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8/3/2019 What is the Difference Between Management Accounting
Financial Accounting and Cost Accounting
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What is the difference between management accounting
financial
accounting and cost accounting?
Management accounting is concerned with the provisions and use
of accounting
information to managers within organizations, to provide them
with the basis to make
informed business decisions that will allow them to be better
equipped in their
management and control functions.
Financial accountancy (orfinancial accounting) is the field of
accountancy
concerned with the preparation of financial statements for
decision makers, such as
stockholders, suppliers, banks, employees, government agencies,
owners, and other
stakeholders. The fundamental need for financial accounting is
to reduce principal-
agent problem by measuring and monitoring agents' performance
and reporting the
results to interested users.
Cost Accounting - In management accounting, cost accounting
establishes budget
and actual cost of operations, processes, departments or product
and the analysis of
variances, profitability or social use of funds. Managers use
cost accounting to
support decision-making to cut a company's costs and improve
profitability.
What is the difference between management accounting
financial
accounting and cost accounting?
Financial accounting relates to the information presented based
on past events and
records.
Cost and managerial accounting is the presentation of financial
information to the
management to be used in decision making while in managerial
accounting
projections are made based on past trends. e.g. projected
cashflows, profit & loss,
balance sheet...
Financial accounting relates to the information presented based
on past events and
records.
Cost and managerial accounting is the presentation of financial
information to the
management to be used in decision making while in managerial
accounting
projections are made based on past trends. e.g. projected
cashflows, profit & loss,
balance sheet...
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8/3/2019 What is the Difference Between Management Accounting
Financial Accounting and Cost Accounting
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Give the relationship between management accounting, cost
accounting and financial accounting?
Financial Accounting - records the transactions that has already
passed (history(
Cost Accounting - calculates the costs of manufacturing products
or provision of
services (present(
Management Accounting - uses past accounting records and applies
some method of
calculation for preparation of future undertakings (future(
Relationship between cost accounting, financial accounting,
management accounting and financial management
Cost Accounting is a branch of accounting, which has been
developed because of the
limitations of Financial Accounting from the point of view of
management control
and internal reporting. Financial accounting performs admirably,
the function of
portraying a true and fair overall picture of the results or
activities carried on by an
enterprise during a period and its financial position at the end
of the year. Also, on the
basis of financial accounting, effective control can be
exercised on the property and
assets of the enterprise to ensure that they are not misused or
misappropriated. To that
extent financial accounting helps to assess the overall progress
of a concern, its
strength and weaknesses by providing the figures relating to
several previous years.
Data provided by Cost and Financial Accounting is further used
for the management
of all processes associated with the efficient acquisition and
deployment of short,
medium and long term financial resources. Such a process of
management is known
as Financial Management. The objective of Financial Management
is to maximize the
wealth of shareholders by taking effective Investment, Financing
and Dividend
decisions. Investment decisions relate to the effective
deployment of scarce resources
in terms of funds while the Financing decisions are concerned
with acquiring
optimum finance for attaining financial objectives.
The last and very important 'Dividend decision' relates to the
determination of the
amount and frequency of cash which can be paid out of profits to
shareholders. On the
other hand, Management Accounting refers to managerial processes
and technologies
that are focused on adding value to organizations by attaining
the effective use of
resources, in dynamic and competitive contexts. Hence,
Management Accounting is a
distinctive form of resource management which facilitates
management's 'decision
making' by producing information for managers within an
organization.
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8/3/2019 What is the Difference Between Management Accounting
Financial Accounting and Cost Accounting
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Financial accounting relates to the information presented based
on past events
and records.
Cost and managerial accounting is the presentation of financial
information to
the management to be used in decision making while in managerial
accounting
projections are made based on past trends.
Financial accounting relates to the information presented based
on past events
and records.
Cost and managerial accounting is the presentation of financial
information to
the management to be used in decision making while in managerial
accounting
projections are made based on past trends.
