Everything you need to know about the key differences between cost accounting and management accounting.
Cost Accounting and Management Accounting, are used interchangeably and are used in one and the same sense. Therefore, cost accounting supports management accounting and in turn management accounting pushes cost accounting further according to the needs of the management.
Because of this strong bondage between the cost accounting and management accounting are one and the same thing nowadays.
Cost accounting and management accounting are both internal to an organization.
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Both have, more or less, the same objective of assisting management in its planning, decision making etc. It is not worthwhile to distinguish the two inter-related disciplines as two branches of accounting.
The main points of difference and distinction between cost accounting and management accounting are as follows:- 1. Object 2. Growth of Accounting 3. Focus 4. Basis of Recording 5. Coverage 6. Scope 7. Position in Hierarchy 8. Utility 9. Observation of Principles and Format 10. Types of Transactions Dealt With.
Difference between Cost Accounting and Management Accounting – 4 Points of Distinction
Difference – Cost Accounting:
1. The cost accountant is primarily concerned with the ascertainment of cost and profitability and with the control of costs through budgetary control, standard costing etc.
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2. Cost accounting evolved out of financial accounting.
3. Cost accountant suggests to the management the best of the alternatives by use of differential cost method.
4. Cost accounting provides just cost information for managerial purpose.
Difference – Management Accounting:
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1. The management accountant is concerned with all such matters in a wider perspective which go to assist the management in the formulation of policies, improvement of productivity, profitability etc.
2. Management accounting evolved out of cost accounting.
3. Management accountant takes into consideration the other non-cost factors also while deciding upon alternatives.
4. Management accounting provides all accounting information. It utilises the principles and practice of cost accounting and financial accounting in the best interests of the business.
Difference between Cost Accounting and Management Accounting – Explained!
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Usually the terms, cost accounting and management accounting, are used interchangeably and are used in one and the same sense. Therefore, cost accounting supports management accounting and in turn management accounting pushes cost accounting further according to the needs of the management. Because of this strong bondage between the cost accounting and management accounting are one and the same thing nowadays.
However, the following points can be taken as differences:
Difference – Cost Accounting:
1. It precedes management accounting
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2. It deals with calculation of cost per unit using various cost techniques
3. It focus mainly on cost control keeping within budgeted and standard limits
4. It does not use much financial accounting
5. Application of statistics and operation research towards control is very much limited in use
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6. Calculation of cost of production dominates cost accounting
Difference – Management Accounting:
1. It starts where cost accounting ends
2. It gathers information from cost accounting to take decisions
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3. It focus mainly on decision making from the given set of courses of action
4. It uses both financial and cost accounting
5. Application of statistics and operation research towards control is very much used in wider scope as compared to cost accounting
6. Planning and control for decision making dominates management accounting
Difference between Cost Accounting and Management Accounting – 10 Key Differences
Difference – Cost Accounting:
1. Object – The main objective is to report current and prospective costs of product, service, department, job or process.
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2. Growth of Accounting – The history of cost accounting dates back to the fourteenth century.
3. Focus – Short-term planning and sophisticated tools are not employed for forecasting purposes.
4. Basis of recording – It is based on both present and future transactions for cost ascertainment.
5. Coverage – It mainly deals with ascertainment, allocation, distribution and accounting aspects of cost.
6. Scope – Cost accounts has narrow scope as it covers matters relating to ascertainment and control of cost.
7. Position in hierarchy – Cost accountant is generally placed at a lower level of hierarchy than a management accountant.
8. Utility – It serves the needs of both internal management and external parties.
9. Observation of principles and format – It follows a definite principle for ascertaining cost and a format for recording.
10. Types of transactions dealt with – It deals with only monetary transactions i.e. quantitative aspect.
Difference – Management Accounting:
1. Object – The main objective is to provide all accounting information relevant for use in formulation of policies, planning, controlling, decision-making, etc. to ensure maximum profits.
2. Growth of accounting – This system of accounting evolved in the middle of the twentieth century. Hence it is of recent origin when compared to cost accounting.
3. Focus – Short range and long range planning and use of sophisticated techniques in the planning and forecasting process.
4. Basis of recording – It is purely based on the transactions relating to future.
5. Coverage – It is mainly concerned with the impact and effect aspects of cost.
6. Scope – It has a wide scope in as much as it covers the area of financial accounts, cost accounts, taxation, etc.
7. Position in hierarchy – Management accountant assumes a superior level in the management hierarchy.
8. Utility – It serves the needs of only internal management.
9. Observation of principles and format- It does not adopt a definite principle and format. Instead, the data to be presented depends upon the need of the management.
10. Types of transactions dealt with – It deals with both monetary and non-monetary transactions i.e. both quantitative and qualitative aspects.
Difference between Cost Accounting and Management Accounting
During the 1950s, emphasis shifted from external users to internal users of cost accounting data. This shift in emphasis led to the emergence of management accounting. The term ‘management accounting’ means provision of information for management activities such as decision-making, planning and control.
According to Charles T. Horngreen, “Management accounting is a system of accounting which is concerned with internal reporting of information to management for- (a) planning and controlling operations; (b) decision-making on special matters; and (c) formulating long-range planning.”
Like cost accounting, management accounting involves reporting at frequent intervals rather than at the end of the year. It is concerned with units and segments of activity rather than the business as a whole. It reports not only historical data but also estimates for the future.
Thus, management accounting may be regarded as an extension of the managerial aspect of cost accounting.
Despite these similarities, the following points of distinction between the two could be noticed:
1. Historical Vs. Predetermined Cost:
The basic focus of cost accounting is cost determination on the basis of past data. Here, cost estimates are no doubt prepared, but relatively much less time is spent thereon. However, management accounting concentrates mainly on the predicted cost data. Managerial decisions always pertain to the future and, hence the need for what costs (and revenues) would be, if a particular alternative is chosen.
2. Decision-Making Vs. Control:
By definition, management accounting is that segment of accounting which aids management in its primary function of decision-making. Decision-making consists of choosing the optional course of action out of a given set of courses of action. However, the main focus of cost accounting is on cost control—keeping them within budgeted and standard limits. If possible, costs have to be reduced too.
3. Use of Financial Accounting:
Management accounting also uses financial accounting techniques such as ratio analysis, funds flow analysis, etc. Truth is that management accounting is cost accounting plus a portion of financial accounting. But cost accounting does not use financial accounts as such. What it does is the analysis and dissection of expenditures shown in financial books.
4. Wider Scope:
For planning and control, management accounting employs many quantitative models from statistics, operations research and computers as also research findings of behavioural sciences. Cost accounting is much less sophisticated, and use of these techniques, if any, is very limited.
To conclude, cost accounting is concerned with the calculation of actual product costs for stock-valuation and profit measurement, whereas management accounting is concerned with provision of information for management activities such as decision-making, planning and control.
Difference between Cost Accounting and Management Accounting – 9 Main Points of Distinction
Cost accounting and management accounting are both internal to an organisation. Both have, more or less, the same objective of assisting management in its planning, decision making etc. It is not worthwhile to distinguish the two inter-related disciplines as two branches of accounting.
Consider what experts opine in this regard:
Dobson – Management accounting is so broad and comprehensive that it includes both financial and cost accounting.
C.T. Horngren – Cost accounting is management accounting plus a small part of financial accounting.
It is because of the overlapping nature of the two in many areas, that everyone talks of cost and management accounting as a single discipline.
However, some distinctions can be drawn thus:
Difference – Cost Accounting:
1. Coverage – Deals with ascertainment, allocation, distribution and accounting aspects of costs
2. Position in the hierarchy – Cost accountant is generally placed at a lower level of hierarchy than a management accountant
3. Approach – Narrow, as the focus is primarily on cost data
4. Emphasis – Cost ascertainment and cost control; may even be called ‘control accounting’
5. Scope – Limited to important techniques like variable costing, break-even analysis and standard costing. Cost accounting does not include financial accounting and has nothing to do with tax accounting
6. Focus – Short term planning. Sophisticated tools not employed for forecasting purposes
7. Orientation – Deals with data supplied by financial accounting; orientation is not futuristic.
8. Evolution – The evolution of cost accounting is mainly due to the limitations of financial accounting
9. Purpose – The main purpose is to report current and prospective costs of product, service, department, job or process
Difference – Management Accounting:
1. Coverage – Concerned with the impact and effect aspects of costs
2. Position in the hierarchy – Management accountant assumes a superior level in the management hierarchy
3. Approach – Wider as he may have to use certain economic and statistical data along with costing data to assist managerial decision making
4. Emphasis – Decision making; may be called ‘decision making accounting.’
5. Scope – Makes use of other techniques like funds flow, ratio analysis, cash flow etc., in addition to variable costing, break-even analysis and standard costing. This includes financial accounting as well as cost accounting, tax planning and tax accounting.
6. Focus – Short range and long range planning and uses sophisticated techniques in the planning and forecasting process.
7. Orientation – Futuristic in orientation; is more predictive in nature than cost accounting.
8. Evolution – Evolved out of cost accounting; it draws heavily on cost data and other information derived from cost accounting. It is merely an extension of the managerial aspects of cost accounting
9. Purpose – The main objective is to provide all accounting information relevant for use in formulation of policies, planning, controlling, decision making etc., to ensure maximum profits.
Difference between Cost Accounting and Management Accounting
Though few differences can be identified between Cost Accounting and Management Accounting, the line of difference is very thin. Because, Cost Accounting, at present, comprises of some of the advanced techniques and systems of Costing such as Marginal Costing, Standard Costing.
Budgetary Control, Responsibility Accounting, etc., and therefore, it (i.e., Cost Accounting) tends to conform to Management Accounting. Consequently, not much difference and not many differences can be found between the two. Further, both serve the internal parties (viz., management).
However, few minor differences that exist between the two are presented and analysed below:
Difference – Cost Accounting:
1. Primary Objective – Cost Accounting aims at ascertaining the cost of goods and services. It lays emphasis on the stage by stage computation of costs.
2. Time Factor – It lays emphasis on the past but less emphasis on the future. That means, it reports about costs that have been incurred.
3. Information Coverage – Cost reports deal mainly with the costs – incurred or budgeted and standard, variances, savings, etc.
4. Governing Principles, Rules, etc. – Cost accounts and reports are prepared as per certain rules, principles, procedure, etc., as specified by the appropriate authority (e.g., The Institute of Cost and Works Accountants of India, ICWAI) to the industry to which the company belongs to.
5. Statutory Verification – Cost accounts and reports, in many cases, are subject to statutory audit (i.e., Cost Audit). Hence, they should be prepared, as far as possible, on objective manner.
6. Utility of Reports – Though cost reports are meant for management, they are useful even to the external parties.
Difference – Management Accounting:
1. Primary Objective – Management Accounting aims at the presentation of cost data, to the extent required, wherever and whenever they are required together with other relevant information to management for taking decisions.
2. Time Factor – It predicts the future on the basis of the past events, present happenings and future estimates.
3. Information Coverage – Cost data form a part of managerial reports but not the sole aspects.
4. Governing Principles, Rules, etc. – No such rigidity is there in the case of managerial reports. The procedure, format, etc., can be modified from time to time depending upon convenience and requirements.
5. Statutory Verification – Management reports are not subject to any statutory audit. Of course, there is a Management Audit. But it is voluntary and it evaluates the managerial functions, decisions, etc. However, management reports include both the objective and the subjective data.
6. Utility of Reports – Management reports are useful only to the management but not to both internal and external parties.
In spite of the above minor differences between the two, both work as complementary. Because, Management Accountant is not in a position to discharge his duties and responsibilities in the absence of a sound Cost Accounting System. This is due to the fact that Cost Accounting provides some of the useful data to the Management Accountant, who in turn utilizes them to appraise the management.
In the same way, Cost Accounting would be of not much use to the managerial personnel in the absence of proper Management Accounting System. Hence, both Cost Accounting and Management Accounting are complementary to each other.
Difference between Cost Accounting and Management Accounting – 5 Major Points of Distinction
The two systems of accounting have some differences which are given below:
Difference – Cost Accounting:
1. Objective – Its main objective is to ascertain and control the cost for management.
2. Scope – Its scope is narrow for not including Financial Accounting, Tax Planning and Tax Accounting.
3. Tools & Techniques – It uses standard costing, managerial costing (break even analysis) and Budgetary Control.
4. Priority – The job of Cost Accountant comes after Management Accountant.
5. Installation of system – This system can be installed without Management Accounting.
Difference – Management Accounting:
1. Objective – Its main objective is to help the management in taking decision.
2. Scope – It has a wider scope for including Financial & Cost Accounting, Tax Planning and Tax Accounting.
3. Tools & Techniques – Management Accountant uses, Cash Flow statement Fund flow statement and Ratio analysis etc.
4. Priority – The job of Management Accountant comes first and priority in position to Cost Accountant.
5. Installation of system – For Installation, it needs both financial and cost accounting as its base.
Difference between Cost Accounting and Management Accounting
In an organization, where different types of goods are being produced, the process of stock valuation requires to identify the costs of individual product or job. The total value of work in process and stock of finished goods forms the basis for valuation of closing stock. This valuation of closing stock is deducted from the total costs of the period.
The balance cost is matched with the revenue to find out the profit. The valuation of stock is shown in the balance sheet as closing stock. Costs are, therefore, traced to each individual product/ unit in order to allocate the costs incurred during a period between cost of goods sold and cost of closing stock and inventories. This information is provided by cost accounting.
Cost accounting deals with the process of determining the cost of some particular product or service. The cost data are used both in external and internal reporting. The internal use of cost data has resulted in accumulation of cost in a different manner from that used by financial accounting. This difference in accumulation process gives rise to management accounting.
The line of difference between cost accounting and management accounting is very thin and quite often the two terms are used synonymously. The cost accounting concentrates on accumulation of cost for stock valuation required in external reporting. On the other hand, management accounting provides information for cost accumulation within the organization to help the managers make better decisions.
The scope of management accounting is broader than cost accounting. In cost accounting, primary emphasis is on cost and it deals with accumulation of costs. On the other hand, the thrust in management accounting is towards decision making. However, it may be noted that both are internal to the organization.
Though there is a good deal of overlapping in the function of cost accounting and management accounting, yet the two can be differentiated as follows:
1. Cost accounting is concerned with ascertainment, allocation, accumulation and accounting for cost, whereas the management accounting emphasizes decision making and control.
2. Basic data is collecting in cost accounting (and also in financial accounting) to which tools and techniques of management accounting are applied.
3. In cost accounting, the tax effect and tax planning are ignored while these are essential variables for management accounting analysis.
4. Cost accounting has only a short term perspective and nothing to do with long range planning. But in management accounting, both the short run as well as long run perspectives are considered.
5. Funds flow analysis, cashflow analysis and projected financial statement analysis are important tools of management accounting, but do not find place in cost accounting.
6. Cost accounting, do not attempt to evaluate the performance, but the management accounting is concerned very well with the evaluation of performance also.
7. Cost accounting is historical in nature while the management accounting is futuristic in approach as it deals with planning.
Difference between Cost Accounting and Management Accounting – Explained!
Management accounting involves application of appropriate techniques and concepts, which help management in establishing a plan for reasonable economic objectives. It helps in making rational decisions for accomplishment of these objectives. Any workable concept or technique, whether it is drawn from financial accounting, cost accounting, economics, mathematics and statistics, can be used in management accountancy.
The data used in management accountancy should satisfy only one broad test. It should serve the purpose that it is intended for. A management accountant accumulates, synthesises and analyses the available data and presents it in relation to specific problems, decisions and day-to-day task of management. A management accountant reviews all the decisions and analyses from management’s point of view to determine how these decisions and analysis contribute to overall organisational objective.
A management accountant judges the relevance and adequacy of available data from management’s point of view. The scope of management accounting is broader than the scope of cost accounting. In cost accounting, primary emphasis is on cost and it deals with its collection, analysis, relevance, interpretation and presentation for various problems of management.
Management accountancy utilizes the principles and practices of financial accounting and cost accounting in addition to other modern management techniques for efficient operation of a company. The main thrust in management accountancy is towards determining policy and formulating plans to achieve desired objective of management. Management accountancy makes corporate planning and strategy effective and meaningful.
CIMA defined it as “an integral part of management concerned with identifying, presenting and interpreting information used for – (a) formulating strategy; (b) planning and controlling activities; (c) decision taking; (d) optimizing the use of resource; (e) disclosure to shareholders and Others external to the entity; (f) disclosure to employees; (g) safeguarding assets.”
The above involves participation in management to ensure that there is effective:
(i) Formulation of plans to meet objectives (strategic planning); (ii) Formulation of short-term operation plans (budgeting/profit; planning); (iii) Acquisition and use of finance (financial management) and recording of transactions (financial accounting and cost accounting); (iv) Communication of financial and operating information; (v) Corrective action to bring plans and results into line (financial control); (vi) Reviewing reporting on systems and operations (internal audit, management audit).
Difference between Cost Accounting and Management Accounting
Cost accounting and management accounting both these systems of accounting are mainly concerned with the objective of helping the management in planning, control and decision making. Both these systems are concerned with internal information systems which helps the management in day to day running of the organisation specifically in cost control matters.
Both these systems apply common tools and techniques like budgetary control, standard costing, differential costing, etc. In spite of these similarities there are certain differences between cost accounting and management accounting.
These may be as follows:
Cost Accounting:
1. Emphasis
In cost accounting the main emphasis is on calculation of cost per unit and control of cost.
2. Derivation of Data
Cost accounting data are derived basically from financial accounts.
3. Status
The status of the cost accountant in the organisation comes after the management accountant.
4. Tools and Techniques
Cost account has greater application of standard costing, variable costing, differential costing, and budgetary control as tools for analysis of cost.
5. Installation of system
Cost accounting can be installed without the help of the management accounting in the organisation.
6. Planning Aspect
Cost accounting is mainly concerned with short-term planning
7. Scope
Cost accounting does not include tax planning and tax accounting
8. Purpose
The main purpose of cost accounting is the reporting of the current and expected cost of production of a product, job, or process.
Management Accounting:
1. Emphasis
In management accounting the main emphasis is on decision making.
2. Derivation of Data
Management accounting data are derived from both cost accounts as well as from financial accounts.
3. Status
The status of the management accountant is higher than the cost accountant in the organisation due to direct participation in the decision making process.
4. Tools and Techniques
Management accountant in addition to the tools of cost accountant has to apply others like fund flow statement, cash flow statement, ratio analysis, etc.
5. Installation of system
Management accounting system cannot be properly installed without a proper cost accounting system.
6. Planning Aspect
Management accounting is concerned with short term as well as long term planning of the organisation
7. Scope
Management accounting includes tax planning and tax accounting.
8. Purpose
The purpose of management accounting is to provide the information which helps in planning, control and decision making.
Some of the more differences are highlighted below:
Cost Accounting:
1. It is concerned with preparation of cost statements and reports of the purpose of ascertainment and analysis of cost.
2. It uses costing methods and techniques for controlling and decision making.
3. In cost accounting cost sheets, loss reports, utilization reports are prepared.
4. It is concerned with solving certain problems of management.
5. It is concerned with management level activities.
Management Accounting:
1. It is concerned with generating statement and reports for the purpose of managerial decision making process
2. It uses modern techniques drawn from cost accounting, economics, mathematics, statistics, financial accounting to asset decision making
3. In management accounting fund flow statements, ratio analysis consolidation reports are prepared.
4. It is concerned with techniques that are used for the efficient operations of the organization.
5. It is concerned with top executive level activities.
Difference between Cost Accounting and Management Accounting
Difference – Cost Accounting:
1. It analyses costs for controlling maximizing efficiency.
2. It uses the principles and practices of cost accounting.
3. It provides internal reporting to managers for use in planning and controlling routine operations.
4. The cost accountant reports to the management about the variances from budgets or standards and presents a comparative data of various periods.
5. The cost accountant works out the year’s operating results.
6. It is the complement of management accounting.
Difference – Management Accounting:
1. It assists the management in planning, decision-making, and control.
2. It uses the principles and practices of both cost accounting and financial accounting.
3. It provides internal reporting to managers for use in decision-making before formulating major plans and policies.
4. The management accountant suggests how to improve upon the operating results by suggesting ways for cost control and cost reduction.
5. The management accountant works out future operating statements.
6. It is an extension of managerial aspects of cost accounting.
Difference between Cost Accounting and Management Accounting
Difference – Cost Accounting:
1. Primary Objective
Cost Accounting aims at ascertaining the cost of goods and services. It lays emphasis on the stage by stage computation of costs. Further, it deals with cost control, matching of cost and revenue, and assessment of performance of the operating activities.
2. Information Coverage
Cost reports deal mainly with the costs – incurred or budgeted and standards, variances, savings, etc.
3. Nature of Data
Normally, Cost Accounting lays emphasis on the past and therefore, the quantitative data are recorded in cost books of accounts.
4. Governing Principles, Rules, etc.
Cost Accounts and Reports are prepared as per certain rules, principles, procedure, etc., as specified by the appropriate authority (e.g., ICWAI) to the industry to which the company belongs to.
5. Time Factor
It lays more emphasis on the past and present, and less emphasis on the future. That means, it reports about costs that have been incurred.
6. Utility of Reports
Though cost reports are meant for management, they are useful even to the external parties.
7. Inter-dependence
Cost Accountant provides voluminous data to the Management Accountant and therefore, acts as a source of information.
Further, the Costing system can be installed in an organization without a Management Accounting system. That means, even without a Management Accounting system, the Costing system can function.
8. Statutory Verification
Cost accounts and reports, in many cases, are subject to statutory audit (i.e., Cost Audit). Hence, cost reports should be prepared, as far as possible, in an objective manner.
Difference – Management Accounting:
1. Primary Objective
Management Accounting aims at the presentation of cost data, to the extent required, wherever and whenever they are required together with other relevant information to the management for taking decisions and for planning and coordinating the activities of the business enterprise.
2. Information Coverage
Cost data form a part of managerial reports but not the sole aspects. Because, managerial reports cover various aspects such as costs, budgets, tax planning, projection, etc. Hence, the scope of Management Accounting is broader.
3. Nature of Data
Management Accounting uses and supplies not only the quantitative but also the qualitative information.
4. Governing Principles, Rules, etc.
No such rigidity exists in the case of managerial reports. The procedure, format, etc., can be modified from time to time depending upon convenience and requirements.
5. Time Factor
It predicts the future on the basis of the past events, present happenings and future estimates. It also facilitates the formulation of plans and policies.
6. Utility of Reports
Management reports are useful only to the management but not to both internal and external parties.
7. Inter-dependence
Management accounting, for its reports, extracts the maximum information from Cost Accounting reports. And therefore, Cost Accounting is a necessity for the smooth functioning of Management Accounting.
Because, Management Accounting cannot exist in the absence of a proper and systematic Cost Accounting system.
8. Statutory Verification
Management reports are not subject to any statutory audit. Of course, there is a management audit. But, it is voluntary and internal, and it evaluates the managerial functions, decisions, etc. However, management reports include both the objective and the subjective data.
In spite of the above minor differences between the two, both work as complementary. This is due to the reason that the Management Accountant is not in a position to discharge his responsibility in the absence of a sound Cost accounting system.
Because, Cost Accounting provides some of the useful data to the Management Accountant who in turn utilizes them to appraise the management. In the same way, Cost Accounting would be of not much use to the managerial personnel in the absence of a proper Management Accounting system. Hence, both are complementary.
Difference between Cost Accounting and Management Accounting
Management accounting is an extension of cost accounting and both help the business in optimal decision-making.
The distinction between the two may be summarized in the following points:
Difference – Cost Accounting:
1. Objective
Its main objective is to ascertain, allocate and do accounting for costs, and to assist the management in the process of its cost control.
2. Focus
Its focus is on maintaining the cost accounts and cost reduction and cost management.
3. Quantitative data
It uses only quantitative cost data measurable in monetary terms.
4. Scope
It is simply restricted to cost determination.
5. Statutory audit
Reports as prepared in cost accounting are subject to statutory audit (i.e., cost audit) in many countries.
Difference – Management Accounting:
1. Objective
Its main objective is to assist the management in the process of its planning, controlling, performance evaluation and decision-making by providing necessary information on time.
2. Focus
It focuses more on preparing reports and statements for top management to facilitate decision-making.
3. Quantitative data
It uses both quantitative as well as qualitative data, measurable and even non-measurable in monetary terms.
4. Scope
It has a wider application as it may include tax planning, advisory to the management and other divisions of the enterprise.
5. Statutory audit
Reports as prepared in management accounting are not subject to statutory audit.
Difference between Cost Accounting and Management Accounting
Cost Accounting:
1. Growth of Accounting
The history of cost accounting dates back to the fourteenth century.
2. Object
The main objects of cost accounts are to ascertain and control cost.
3. Basis of Recording
It is based on both present and future transactions for cost ascertainment.
4. Scope
Cost accounts has a narrow scope as it covers matters relating to ascertainment and control of cost.
5. Utility
Cost accounts serves the needs of both internal management and external parties.
6. Types of Transactions Dealt with
It deals only with monetary transactions, i.e., it covers only quantitative aspects.
7. Observation of Principles and Format
Cost accounts follow a definite principle for ascertaining cost and a format for recording.
Management Accounting:
1. Growth of Accounting
This system of accounting evolved in the middle of the 20th century. Hence it is of recent origin when compared to cost accounting.
2. Object
The main objective of management accounting is to provide useful information to management for decision-making.
3. Basis of Recording
It is concerned purely with the transaction relating to future.
4. Scope
It has a wide scope in as much as it covers the areas of financial accounts, cost accounts, taxation, etc.
5. Utility
Management accounting serves the needs of only internal management.
6. Types of Transactions Dealt with
It deals with both monetary and nonmonetary transactions, i.e., both quantitative and qualitative aspects.
7. Observation of Principles and Format
It does not follow a definite principle and format. Instead, the data to be presented depends upon the need of the management.