Difference between Cost Accounting and Financial Accounting: Skills and Courses
In this article, check differences between cost accounting and financial accounting, along with skill required and courses in each domain.
Cost & Financial Accounting
When it comes to managing a business, accounting plays important role in tracking, analysing, and reporting financial data. Accounting is not just about recording transactions. It has two important branches which are cost accounting and financial accounting.
Cost Accounting and Financial Accounting are most important branches of accounting that play important role in analysing, tracking and reporting financial data. Cost and Financial Accounting deal with financial information, they both have different purposes. It is important for students preparing for competitive examinations like CA, CMA, and B.Com to understand difference between cost accounting and financial accounting.
- What is Cost Accounting?
- Differences Between Cost Accounting and Financial Accounting
- Cost Accounting Courses
- Financial Accounting Courses
What is Cost Accounting?
Cost Accounting is a form of accounting that focuses on recording, analysing and controlling costs related to production, operation and services. With the help of cost accounting, the management can make informed decisions regarding pricing and profitability.
Features of Cost Accounting
- Measures, records, and reports cost per unit, department, or process.
- Helps in budgeting, cost control, and analysis.
- Used mainly by managers for decision-making.
- Not mandatory under law but highly useful for efficiency and competitiveness.
What is Financial Accounting?
Financial Accounting is a form of accounting which involves reporting financial transactions that is taking place in a business over some time. The financial accounting helps in providing a fair view of the financial position of the company to the stakeholders.
Features of Financial Accounting
- Prepares financial statements such as Balance Sheet, Profit & Loss Account and Cash Flow Statement.
- Follows guidelines, accounting standards and principles.
- Compulsory for all registered businesses.
- Primarily serves shareholders, banks and government authorities.
Differences Between Cost Accounting and Financial Accounting
| Parameters |
Cost Accounting |
Financial Accounting |
|---|---|---|
| Objective |
Helps management control costs and improve decision-making. |
Provides information about the financial performance |
| Type of Information |
Records labour, material, or any information utilised in the manufacturing process. |
Records information about monetary terms. |
| Users |
Internal management. |
External stakeholders and management. |
| Nature |
Classifies, cost records, presents and interprets it in a significant manner. |
Records, presents and interprets transactions in monetary terms |
| Legal Requirement |
Not legally required. |
Legally required for all registered companies. |
| Reports |
Cost sheets, budgets, and variance reports. |
Balance Sheet, Profit & Loss Account, Cash Flow Statement. |
| Time Period |
Prepared as needed (daily, weekly, and monthly). |
Prepared annually or quarterly. |
| Focus |
Unit cost, department cost, and efficiency. |
Overall financial position and profitability. |
| Standards |
No fixed format; depends on management needs. |
Must follow accounting standards and legal rules. |
| Valuation of stock |
At a cost |
Net realised value or price, whichever is lower. |
| Publication |
Not published |
Published in the case of companies |
Cost Accounting Courses
Some of the top Cost Accounting courses that candidates can pursue are:
- Certificate in Cost Accounting (3 to 6 months)
- Diploma in Cost and Management Accounting (1-year)
- B.Com in Cost Accounting / BBA in Accounting (UG program)
- M.Com / MBA in Cost & Management Accounting (PG program)
- Cost and Management Accountant by ICMAI
- Online Courses
Financial Accounting Courses
Some of top Financial Accounting courses are:
- Certificate in Financial Accounting (3 to 6 months)
- Diploma in Financial Accounting
- B.Com in Accounting & Finance
- M.Com in Accounting & Finance / MBA in Finance
- Chartered Accountancy
- International Certifications- ACCA (UK), CPA (US), CIMA
- Online Courses
Read more:
Difference between Financial Accounting and Management Accounting
Primarily, there are four types of Financial Accounting: