Financial Accounting vs. Cost Accounting

In broader terms, the process of accounting deals with keeping detailed records and predicting the economic nature of business. It gives the assurance that all the actions going on in a company are correct and according to the requirement. There are many terms used in it, and two of them are known as Financial Accounting and Cost Accounting. The primary difference in both of them is that financial accounting is the first step in any company while cost accounting is the second phase of that process. Cost accounting cannot take place without a proper financial audit conducted. First of all, defining bot the terms will help in developing a good understanding. Cost accounting is a process in which accounts are managed with the aid of data which is received from financial accounting, this is done at the end of every cycle of finance according to a company. Financial accounting is different in a way that it records all the activities going on including the money transactions which help in developing statements that are presented to the management to help them while taking individual decisions. We can say that the main aim of cost accounting is to provide information related to costs so that they can be managed according to the budget and decisions can be taken accordingly. While financial accounting goes in detail to keep all the factors insight and does not always depend on just the figures which are presented. It deals with the bulk of data in different forms and does not only cater the small chunks. Cost accounting is to make sure all the costs are managed while financial accounting deals with the aim that correct assessment of a company is shown so that better arrangements can be made to make the position even better. Therefore, it does not estimate or guess anything but only takes into account the factual data. Some of the other factors related to this will be discussed in the next couple of paragraphs and differences, in a nutshell, be given at the end.