Difference Between cost accounting and financial accounting

Question

Accepted Answer

Cost accounting focuses on internal costs and helps in decision-making, while financial accounting focuses on external reporting and compliance.

Cost accounting is used for internal purposes, such as determining the cost of producing a product or service.
Financial accounting is used for external reporting to stakeholders, such as investors and regulators.
Cost accounting helps in decision-making by providing information on the cost of different options.
Financial accounting follows generally accepted accounting principles (GAAP) and focuses on providing accurate and reliable financial statements.
Cost accounting may use different methods, such as job costing or process costing, to allocate costs to products or services.
Financial accounting includes preparing financial statements like the balance sheet, income statement, and cash flow statement.
Cost accounting is more detailed and specific to individual products or services, while financial accounting provides an overall picture of the company's financial health.
Example: Cost accounting may calculate the cost per unit of a product, while financial accounting reports the total revenue and expenses of the company.
Example: Cost accounting may analyze the cost of producing a new product, while financial accounting reports the company's profitability to investors.

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