What’s the difference between cost accounting and financial accounting? |FAQs
Wondering about the difference between cost accounting and financial accounting?
Both entail the preparation of financial reports, but the content of those reports and who they are used by differs.
Watch this 1 minute video where Janine Daniels, Head Tutor of the University of Cape Town Cost and Management Accounting online short course, guides you through the difference between cost accounting and financial accounting.
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Financial accounting involves the preparation of a standard set of financial reports for external users, which may include investors, creditors, credit rating agencies and regulatory agencies. It is mostly used to report on the position, performance and cash flow of the business for a period that already occurred – generally, the past year.
Cost accounting involves the preparation of a broad range of internal financial reports that management needs in order to run a business effective and efficiently. It involves costing, pricing, forecasting, asset management and control, and enables management to make better business decisions.