Though both these formats of accounting are associated with financial domain, yet there are certain differences in regards to these branches. Financial Accounting deals with accounting details of a company stating its position in the market at financial level. Cost Accounting provides a record of those costs that are incurred in a business which would help in its better management.
Differences associated with these branches of accounting:
Since financial accounting is an annual data hence based on this, it can be seen whether a particular company is incurring profit or loss. It is based on these accounting details that a company can determine its further productivity.
Cost accounting is concerned with recorded costs during a specific time period that is used for determining where exactly the company needs to change its costs and in what manner.
Being a positive science, financial accounting deals with costs associated with that company on an annual basis. However, when cost accounting is considered, it is important to note that it deals with specific costs during a specific period and is mostly associated with management level costs. Hence, requirement of this by the company is only after certain periodic intervals. Also, it can be termed as both positive and normative science.
Since financial accounting is a yearly data hence financial decisions pertaining to a concerned business unit can be taken only after a certain period of time. In comparison to that, cost accounting being a record of the interval, sudden decisions such as fixing of price or changing certain range of products is associated with this data.
In case of financial accounting, available stocks are calculated either at their cost price or market price, whichever comes at a lower rate. However, for cost accounting, stocks are always valued at their cost price.
Dealing specifically with monetary transactions, financial accounting can be said to be an external mode specifically based on payment or receipt of cash. In comparison to that, cost accounting specifically deals with internal mode of transaction, and there is no monetary issue associated with it.
Financial accounting data is an annual presentation of costs incurred by that company. Hence, costs in this case are in a consolidated mode, in comparison to cost accounting that presents a record of costs in a segmented manner.
Financial accounting is a fixed data that presents the total costs incurred by the company in that particular year. Cost accounting presents both actual data along with estimated value in case of certain products.