Management accounting gathered data or information from cost accounting and financial accounting. After that, it analyzes and interprets the data to prepare reports and provide necessary information to the management.
The interlocking accounting is a system where the cost and financial accounts are maintained independently of each other, and in the cost account no attempt is made a aseparate record of the financial account transactiona
strength of historical cost accounting
The financial breakeven point is a more relevant measure than the accounting breakeven point because the accounting breakeven point does not consider the initial investment in the project. With any investment, one has the option to venture into it, or to take a less risky route and invest (in a bond or a stock that would give them a more guaranteed return). Thus an accounting breakeven, considers all cost, except the opportunity cost of the capital invested in project, and this is something that the financial breakeven considers. Financial breakeven point is the point where NPV is greater than or equal to zero: the point where there is economic value added® (a term trademarked by Stem-Stewart). This is because in calculating the financial breakeven, the formula includes the opportunity cost of capital: the initial investment divided by the timeannuity factor at the discount rate (where the discount rate is the opportunity cost of capital).
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Economic costs look refers to a combination of accounting costs(Explicit costs),Implicit costs and opportunity costs. Accounting costs only considers financial and costs incurred or agreed to be payed in order to produce a good or a service.
1- Cost Accounting 2 - Financial Accounting 3 - Management Accounting
Management accounting includes both financial and cost accounting, tax planning and tax accounting. Cost accounting, on the other hand, does not include financial accounting, tax planning and tax accounting.
cost accounting provides the basic information for both management and financial accounting.The similarities between government accounting and financial accounting is that both involves the balance of accounts.
to know the financial position(i.e. profit or loss) and cost accounting to know the cost price of product of business and management accounting is to take the decision based on financial and cost accounting to prepare bugdget, analysis etc
Following are different branches of accounting:1- Cost Accounting2- Financial Accounting3- Management Accountingbranches of accounting are two:1-financial accounting2-management accounting(cost a/c & managerial a/c)
Q.5 Differentiate Financial Accounting and Management accounting
financial accounting and cost accounting
The main categories of accounting include financial accounting, management accounting, and cost accounting. Financial accounting focuses on recording and reporting financial information for external users. Management accounting provides financial information to internal decision-makers and helps in budgeting, planning, and decision-making processes. Cost accounting analyzes the cost of manufacturing a product or providing a service. These categories are interrelated as the information produced in financial accounting is used by management accounting for decision-making, and cost accounting employs the techniques and information provided by both financial and management accounting.
Financial accounting is the preparation of financial statements for decision makers. Cost accounting is collecting, analyzing, summarizing, and evaluating courses of action. Management accounting is simply used to better a company by reviewing the accounting information.
Following are different branches of accounting:1- Cost Accounting2- Financial Accounting3- Management Accountingbranches of accounting are two:1-financial accounting2-management accounting(cost a/c & managerial a/c)
Following are different branches of accounting:1- Cost Accounting2- Financial Accounting3- Management Accountingbranches of accounting are two:1-financial accounting2-management accounting(cost a/c & managerial a/c)
1 - Cost accounting 2 - Financial accounting 3 - Management accounting