In this article, we discuss Cost Accounting vs Management Accounting in detail –, There are many differences between cost accounting vs management accounting. Management accounting offers a big picture of how management should strategize. Cost Accounting : The purpose of cost accounting is to analyse the expenditure so as to ascertain the cost of various products manufactured by the firm and fix the prices. This has been a guide to Cost Accounting vs Management Accounting. Cost Accounting vs Management Accounting: Cost accounting is that section of accounting which strives at generating data to manage operations with a view to maximizing profits and performance of the company, it is also termed control accounting. Inleiding. Historic information is the basis of decision making. Both cost accounting vs management accounting help management makes effective decisions. Let’s glance at these distinctions. Statutory audit is mandatory for cost accounting in giant businesses since there can be chances of huge discrepancies. Cost accounting isn’t dependent on management accounting to be successfully implemented. Here, 30 dollars are sacrificed to obtain a watch. Cost accounting reports are useful to the management as well as the shareholders and creditors of a concern. Variable cost changes as per the increase or decrease of production units. Financial accounting, cost accounting, statistics etc are related with management accounting. Similarities between Cost Accounting and Management Accounting: Many of the fundamental processes of cost accounting and management accounting are similar. The below table summarizes the key differences between cost accounting vs management accounting. It also uses those data that cannot be measured in terms of money. Provides historical and predictive information for future decision-making. Conversely, management accounting is the type of accounting which assist management in planning and decision-making and thus known as decision accounting. In another way, the cost is what the business sacrifices in order to produce one unit of product. The exact motto of these reports is to help management get all the information at their fingertips and use the information to make effective decisions for the business. The difference between management accounting and cost accounting is that management accounting covers more ground. But their scope and tools are completely different. If you are new to accounting you can learn basic accounting here. Accounting is the art and science of recording, classifying, summarizing, and analyzing inputs to make a sense of the information related to financial, management, or cost. That means direct costs can be directly identified as being used in the production of goods. For example, the renting business pays for running a production operation would be called indirect costs since we can’t identify how much portion of the rent is used for the production of goods, how much is used for preparing the raw material, how much is used to install the simulation systems that can train the workers. Cost is commonly defined as ‘sacrificed resource’ for a particular thing. Management accounting refers to accounting information developed for managers within an organization. The reason these costs can’t be identified separately because these costs assist in functioning multiple activities. We just need to put the figures in the right place. To better understand these accounting branches, we need to understand the difference between cost accounting vs. financial accounting. The total cost of raw material changes if the production increases or decreases. Cost accounting revolves around cost computation. On the other hand, financial accounting helps us understand how profitable a company is through financial statements.For example, if a company has sold $100,000 worth of products in a year and expended $65,000 for making the sales (cost of goods sold plus other operating expenses), then the profit of the company for the year is $35,000.Cost Accounting vs Financial Accounting Infographics Since both of these help make management effective decisions, management accounting has many more tools than cost accounting. Denk aan uitleg over Management Accounting, samenvatting, Samenvatting, Accounting, MA, Management accounting, MA M6 & Leerjaar 2. The scope of cost accounting is much narrower. You will Learn Basics of Accounting in Just 1 Hour, Guaranteed! Cost accounting is one of the many sub-sets of management accounting. The scope of management accounting is much broader and vaster. That means these costs remain similar within a broad range of the spectrum. Cost accounting is that branch of accounting which aims at generating information to control operations with a view to maximizing profits and efficiency of the company, that is why it is also termed control accounting. As management accounting depends a lot on cost accounting to prepare reports, cost accounting happens to be a sub-set of management accounting. Here are the characteristics of these reports –, Since we know that management accounting periodical reports serve a great purpose in making effective decisions for management, we need to know the importance of management accounting in business. The key difference between Cost Accounting vs Management accounting is that Cost accounting is gathering and analyzing the information related to cost which provides only the quantitative information to the users of the reports whereas Management Accounting is the preparation of the financial as well as non-financial information i.e., it involves both quantitative and qualitative information. Example: Total cost of producing one unit of a pencil is Rs.30, the cost break up of various stages can be shown in figure 1: Figure 1: Cost breakdown If you want to learn Cost Accounting professionally, then you may want to look at 14+ hours of Cost Accounting Course, There are basically three functions of cost accounting –. Principals of cost accounting and financial accounting are used in management accounting. Cost accounting focuses on the costs of manufacturing goods or providing services. Cost accounting generates information so as to keep a check on operations, with an aim of maximizing profit and efficiency of the concern. Cost accounting is often associated with managerial accounting. Management accounting includes a lot of aspects of business such as decision making, strategizing, planning, performance management, risk management, etc. Cost accounting is the process of translating these estimates and data into knowledge that will ultimately be used to guide decision-making. Cost accounting wordt zowel voor management- als voor financial accounting gebruikt. And reach of management accounting should strategize only cost accounting focuses on the other hand, to create effective,! Considered to be successfully implemented let ’ s why it is imperative that you cost! Of WallStreetMojo used –, there are many differences between cost accounting is one of the fundamental of. Used –, Copyright © 2020 1 Hour, Guaranteed an enterprise accounting refers accounting... 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