Difference Between Cost Accounting and Financial Accounting

Many of us wonder and when someone asks what is the difference between financial accounting and cost accounting. So,today in this article we will try to understand the difference between the Financial Accounting and Cost Accounting.

Basis	Financial Accounting	Cost Accounting
Double Entry Principle	§  Financial Accounting is maintained in accordance with the double entry principle.	§  Cost Accounting is maintained in accordance to the elements of cost.
Objective	§  Financial Accounting is prepared with the objective of showing the net profit or loss and financial position of the firm.	§  Cost Accounting is prepared or maintained with an objective of ascertaining the cost or expenses in respect of total cost, cost per unit and so on.
Overall Cost	§  Financial Accounting shows the total expenses that have taken place without any classification.	§  While Cost Accounting shows the total cost with detailed classification of different types costs and occurrence.
Unit Cost	§  Financial Accounting does not ascertain the cost per unit.	§  Cost Accounting on the other hand ascertains the cost per unit.
Price Determination or Pricing	§  Financial Accounting is not helpful or useful in price determination or pricing	§  Cost Accounting helps us in price determination or pricing.
Element wise Control	§  Under Financial Accounting element wise control of expenditure is not possible.	§  Under Cost Accounting element wise control is possible
Disclosure of Profit & Loss	§  Financial Accounting discloses the profit and loss taken place during a financial year	§  Cost Accounting does not disclose the profit and loss that has occurred during a financial year.
Valuation of Stock	§  Stock is valued on the basis of the cost or market price whichever is lower	§  Stock is valued only at the cost price i.e. cost of production
Analysis of Records	§  Financial Accounting is just a postmortem of past cost.	§  Cost Accounting not only represents the past costs but also records the present cost and helps to develop the standard cost.
Facts and Figures	§  Financial Accounting deals with the actual facts and figures.	§  Cost Accounting deals with the actual facts & figures and estimated facts and figures.
Recording of Information	§  Financial Accounting only records the monetary information.	§  Cost Accounting records monetary and non-monetary information.
Compulsory	§  Financial Accounting is compulsory.	§  Cost Accounting is optional.
Purpose to Service	§  Financial Accounting is mainly intended to serve the external parties such as creditors, bank, and investors and so on.	§  Cost Accounting is mainly intended to serve the internal parties such as management.
Adoption	§  Financial Accounting can be adopted without the assistance or help of cost accounting	§  Cost Accounting cannot be adopted without the help or assistance of financial accounting.