difference bwten financial and cost Accounting

#  basic  purpose of financial accounting : 
                                                               The main purpose of financials accounting is to provide information about the financial position of the business concern in a general way . It disclose the position of profit or lose and balance sheet of the concern to woner as well as outside parties .  

basis purpose of cost accounting :
                                                        The purpose of cost accounting is to provide information management for proper planing , control and to take appropriate decision .

# statutory requirement of financial accounting :
                                                                                 financial accounts are prepared as per the requirement of the company act and income tax act . it is compulsory to abide by the low .

statutory requirement of cost accounts :
                                                                 it is kept to meet the requirement of management .it is optional . 

# analysis of expenditure of financial accounting :
                                                                                   it classifies record and analyzes cost according to the nature of expenses . wages salaries ,depreciation ,rent etc good example .

Analysis of expenditure of cost accounting : 
                                                                        it record expenditure in accordance with the purpose for which costs are incurred. it classifies cost as direct and indirect on functional basis.     
 

limitations of financials accounting

cost accounting is a branch of accounting development to do away with with the limitations of financial accounting . Accounting system that maintain the record of financial transaction of a concern is called financial accounting .
       Form the managerial point of view , the information provide by financial accounts is not sufficient . Therefore ,cost cost account was developed . In spite of its utilities and effectiveness , the financial accounting system has the following limitations : 
1. Lack of cost analysis ,
2. Lack of profit analysis ,
3. Historical importance , 
4. Analysis the reasons of losses , 
5. proper measure of efficiency standard, 
6. Inadequate for management ,
7. Lack of materials control , 
8. Determining of selling price , 
9. Analysis of labor cost ,
10. cost reduction .       

Limitations of cost Accounting

In spite of it several advantage cost accounting is not free limitation , which are as follows : 


1. Lack of  uniformity   
                                   Different costing method are used to determine the profit . the result given by cost accounting are more estimate.

2. Join cost  
                   In cost accounting .the major portions of costs are join cost . To determine the cost of a product , join cost should be allocated separately .


3.Expensive 
                    Cost accounting is an expensive system . so only big firms can afford .


4. Development stage 
                                    Cost accounting  principle have not fully  developed . frequently recent concept are tested . For these reasons the principles have not been fully implemented as yet . 

Objectives of cost accounting

The main

objectives of cost account is to analyst the financial activities from which the cost involved could be allocated to each job or process and in the main time the actual  cost of each job or process could be ascertained . these objectives are as   follow: 

1. Ascertainment of cost 

                                        the prime objectives of cost Accounting is to ascertain the cost of product . 

2. To determine selling price 

                                               Cost accounting helps the management  determine the selling price of a product .

3. To help to analyze cost

                                                              Analyzing the cost or a product is another objective of cost accounting . 

4. To control cost 

                             Control is very important to reducing  cost . Here , control may be taken as reducing expenses , increasing working efficiency and minimizing of wages.

5. To reduce cost 

                            supplying quality product at minimum cost is symptom of profitability . 

6. To assist the management 

                                              Another objective of cost accounting is to assist the management by providing factual  information for making appropriate decision and formulating future polices .

7. To assist in preparation of final account 

                                                                      Value of closing stock is compulsory to preparing the final account .    

meaning and definitions of cost Accouuting

Cost accounting has been combined with two words ,'cost and ' accounting ' . The term cost denotes the total of all expenditures involved in the process of production . Accounting , on the other hand , collects and maintain financial records of each income and expenditure and makes the information about it available to the concerned officials . Thus , cost accounting is an art and science of recording , classifying and analyzing the cost involved in raw materials and labor  used in the process of production .cost accounting helps to ascertain the cost per unit , cost per process ,cost per batch cost per department and selling price of a production . 

The information obtained from cost accounting may be used for internal as well as external purpose . 

  Some prominent writers have given their concept of cost accounting . some of the definitions given by them have been reproduced hereunder : 

'' costing is the classifying ,recording and appropriate , allocation of expenditure for the determination of the cost of production or service and for the presentation of suitable arranged data  for purposes of control and guidance of management .'' Harold j. Weldon.

Importance of cost Accounting

One main importance of cost accounting is to overcome the limitations of financial accounting . The following are the importance of cost accounting : 

1. Reveals profitable and unprofitable activities ,

2. Help in cost control ,

3. Helps in decision - making ,

4. Helps in fix selling price , 

5. Helps in inventory control ,

6. Helps in formulating policies ,

7. Helps in cost reduction , 

8. Reveals idle capacity ,

9. Checks the accuracy of financial accounts , ETC.

Objectives of cost accounting

The main objective of cost account is analyze the financial activities from which the cost involved could be allocated to each job or process and in the mean time the actual cost of each job or process could be ascertained . those objective are as follows : 
1. Ascertainment of cost ,
2. To determine selling piece , 
3. To help to analyze the cost ,
4. To control cost , 
5. To reduce cost , 
6. To assist the management ,
7. To assist in preparation of final account , ETC.