Difference between Financial Accounting, Cost Accounting and Management Accounting

	Financial Accounting	Cost Accounting	Management Accounting
Meaning	Preparation of financial statements of an organization to provide the financial information to the interested parties.	Keeps track of various costs incurred in production activities	Provides relevant information to the managers to make policies, plans and strategies for running the business effectively.
Information type	Monetary transactions	Material, labour and overhead
Objective		To determine the cost of production and control the cost	To assist the management by supplying necessary accounting information
Scope		Not broad, deals primarily with cost	Broad
Purpose	Prepare profit & loss account and balance sheet for reporting to owners or shareholders or outside agencies	To provide detailed cost information to management – internal users
Nature	Only historical data	Past as well as present facts and predetermined figures	Relating to the future.
Statutory requirements	Should be prepared according to the legal requirements of Companies Act and Income Tax Act.	Voluntary except in certain industries.	Not compulsory
Format	Specified		Not specified
Accounting principle	GAAP		No such principle
	Reveals profit and loss of the business as a whole – does not show figures of cost and profit for individual products or departments.	Shows detailed cost and profit data for each product line or department etc.
Periodicity	Periodical process – usually annually.	Continuous process – may be daily, weekly, monthly etc.	As per the needs
User	Internal and external	Internal	Only internal
Control aspect	No control function – only recording and reporting	Involves controlling aspects.
	Concerned with only historical records	Concerned with historical as well as current data
Types of transactions	Only external transactions	External as well as internal
Types of statements prepared	P&L account, balance sheet etc	Idle time report, variance report etc.
Performance measurement	Measures the overall performance of organization		Performance of various departments and divisions
Publishing and auditing	Required to be published and audited		Neither published nor audited

Tags:

Cost AccountingFinancial AccountingManagement Accounting