PRESENTATION

DIFFERENCE BETWEEN FINANCIAL,MANAGEMENT AND COST ACCOUNTING

TEAM MEMBERS
NISHA SEHRAWAT KOMAL PRIYA RASHI AGARWAL

WHAT IS ACCOUNTING ALL ABOUT?

RECORDING + MEASURING FINANCIAL TRANSACTIONS (Realated to money) HELP IN ASSESING THE PERFORMANCE AND WEALTH

What is cost accounting?

Cost accounting involves the accumulation, recording and reporting of costs and other quantitative data. The information generated by the cost accounting system is used by an organisation for internal purposes and external purposes.

What is managemnt accounting?

According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities"

What is financial accounting?

Financial accountancy (or financial accounting) is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners, and other stakeholders. Accounting equation=Assets+Liabilities

Difference between financial and management accounting

FINANCIAL ACCOUNTING External(Investors,govern mentauthorities,creditors) Help investors, creditors, and others make investment, credit, and other decisions

MANAGEMENT ACCOUNTING

Internal(Managers of business, employees) Help managers plan and control business operations

Cont.
Financial accounting Highly aggregated information about the overall organization. Must be accurate and timely Compulsory under company law is an end in itself Management accounting Disaggregated information to support local decisions. Usually approximate but relevant and flexible except for few companies, it is not mandatory Is a mean to the end

Cont
Financial accounting It provides information about financial performance and financial position of the business. It classifies records, presents and interprets transactions in terms of money. Management accounting It provides information of ascertainments of costs to control costs and for decision making about the costs. It classifies, records, presents and interprets in a significant manner materials, labor and overhead costs.

Cont
Financial accounting It is primarily concerned with reporting for the company as a whole. Manangement accounting Segment reporting is the primary emphasis

Difference between financial and cost accounting

Financial accounting It records historical data. External users like shareholders, creditors, financial analysts, government and its agencies,etc. It shows profit/loss of the organization. Cost accounting It records and presents estimated, budgeted data. It makes use of both historical costs and predetermined costs. Used by Internal management at different levels. It provides details of costs and profit of each product, process, job,etc.

Cont.
Financial accounting They are prepared for a definite period, usually a year. A set format is used for presenting financial information. Cost accounting They are prepared as and when required. There are no set formats for presenting cost informations.

Financial statements
INCOME

STATEMENT BALANCE SHEET STATEMENT OF CASH FLOW STATEMENT OF STAKEHOLDERS EQUITY

Income statement
The income statement reports a company's profitability during a specified period of time. The period of time could be one year, one month, three months, 13 weeks, or any other time interval chosen by the company.

The main components of the income statement are revenues, expenses, gains, and losses. Revenues include such things as sales, service revenues, and interest revenue.

Balance Sheet
The balance sheet is organized into three parts: (1) assets, (2) liabilities, and (3) stockholders' equity at a specified date (typically, this date is the last day of an accounting period).

Statement of cash flow

The statement of cash flows explains the change in a company's cash (and cash equivalents) during the time interval indicated in the heading of the statement. The change is divided into three parts: (1) operating activities, (2) investing activities, and (3) financing activities.

Statement of shareholders equity

The statement of stockholders' (or shareholders') equity lists the changes in stockholders' equity for the same period as the income statement and the cash flow statement. The changes will include items such as net income, other comprehensive income, dividends, the repurchase of common stock, and the exercise of stock options.

Cost accounting
In cost accounting there are two types of costs:1. Variable cost 2. Fixed cost

Management accounting tools

Business metrics development Price modeling Product profitability Geographic vs. Industry or client segment reporting Costbenefit analysis Cost-volume-profit analysis Client profitability analysis IT cost transparency