Accounting is of different types the most likely words which come across accounting is financial accounting and cost accounting. These two headings are essential but both of them have very different approaches and benefits for business. All individuals must know the accounting since having this knowledge will be useful for all purposes for day to day life.
The combination of both cost accounting and financial accounting can increase the health of a business, and it can also save money and helps to manage risks more effectively.
Financial accounting
Financial accounting is one of the typical types of accounting where all the individuals and business men’s come across. Financial accounts work with the individuals where they help them to prepare file returns, reduce their taxes burns and also which teaches good financial management system.
They also perform various useful functions such as they create an end of year financial reports and helps to produce a balance sheet and profit loss reports and also reporting the financials of the business to the external stakeholders such as stock owners and other government bodies.
Cost accounting
Cost accounting is based on the analyzing current and future business and also which helps to work these processes currently and will cost in future. Cost accounting which uses specific tools and techniques to analyze business data and provide some information such as cost of employee in individuals and team role benefits the current or potential costs of projects and programs are detail discussed and the amount of money that individual parts of the business are projected to use the data and which also helps to understand end to end cost of providing services and products — this cost accounting process which allows the business making more effective way.
Difference between Financial accounting and Cost Accounting
Cost accounting which helps in maintaining cost records of an organization in the form of various financial accounting and this keeps all the financial data in an organization.
Cost accounting records which have both historical and predetermined the costs wherein a financial accounting this has only historical cost records.
Cost accounting users are limited to the internal management of the entity whereas when focusing on the financial accounting they are internal as well as external parties.
Here is the cost accounting stock is valued at any cost while financial accounting stock is evaluated only at the lower price of the two values such as cost or net realizable value.
When using cost accounting, the information is reported periodically at frequent intervals, but financial accounting says only after the completion of the fiscal year.
The purpose of cost accounting is to control costs but the use of financial accounting where this keeps complete records of the financial information which contains all the reports at the end of the accounting period.
Conclusion
By analyzing all these data, the cost accounting data is beneficial when compared for financial accounting.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin