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4 - Cost Accounting and Management Accounting Difference

Cost accounting and management accounting differ in several key ways: 1. Cost accounting records and analyzes cost data to determine product costs, while management accounting provides both financial and non-financial information to managers. 2. Cost accounting provides quantitative information, whereas management accounting provides both quantitative and qualitative information. 3. Cost accounting's main objective is to determine production costs and calculate profits in the short-term, while management accounting aims to provide information to set goals and forecast strategies in both the short and long-term. 4. Management accounting has a broader scope that includes areas like budgeting, planning, and decision making, while cost accounting focuses only on cost data like computation, control, and reduction.

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882 views

4 - Cost Accounting and Management Accounting Difference

Cost accounting and management accounting differ in several key ways: 1. Cost accounting records and analyzes cost data to determine product costs, while management accounting provides both financial and non-financial information to managers. 2. Cost accounting provides quantitative information, whereas management accounting provides both quantitative and qualitative information. 3. Cost accounting's main objective is to determine production costs and calculate profits in the short-term, while management accounting aims to provide information to set goals and forecast strategies in both the short and long-term. 4. Management accounting has a broader scope that includes areas like budgeting, planning, and decision making, while cost accounting focuses only on cost data like computation, control, and reduction.

Uploaded by

Abid Naeem
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Comparison Chart

BASIS OF
COST ACCOUNTING MANAGEMENT ACCOUNTING
COMPARISON

The recording, classifying and The accounting in which the both


summarizing of cost data of an financial and non-financial
Meaning organization is known as cost information are provided to
accounting. managers is known as
Management Accounting.

Information Quantitative. Quantitative and Qualitative.


Type

Ascertainment of cost of Providing information to


Objective production. managers to set goals and
forecast strategies.

Concerned with ascertainment, Impart and effect aspect of costs.


Scope allocation, distribution and
accounting aspects of cost.

Specific Yes No
Procedure

Records past and present data It gives more stress on the


Recording
analysis of future projections.

Short range planning Short range and long range


Planning
planning

Can be installed without Cannot be installed without cost


Interdependency
management accounting. accounting.
Differences between Cost Accounting and Management
Accounting
The key differences between management accounting and cost-accounting are:

1. Data Handling
Cost accounting is associated with the recording and analysis of cost data. Management accounting is
used by the management of a company to produce information for better management.
2. Results
Qualitative information is obtained as a result of cost accounting. On the other hand, management
accounting gives both qualitative and quantitative data.
3. Sub-Type
Cost accounting is an essential part of management accounting. In Malaysia, when an accounting firm is
hired by a large organization, it will conduct both cost accounting and management accounting to give
complete information to the organizations.
4. Aims and Objectives
Cost accounting’s main goal is to determine the cost of producing a product and calculate profits. It is done
to make a short-term strategy. On the other hand, management accounting’s primary objective is to
obtain information for management to set goals and future working procedures. It is performed to create
a long-term management strategy.
5. Rules and Procedures
There are specific rules, procedures, formulas and guidelines that must be followed while doing cost
accounting, while there are no specific set of rules for management accounting. Every firm conducts
management accounting according to its own rules, working conditions and requirements.
6. Scope
Cost accounting’s scope is restricted to cost data. It usually involves cost computation, cost control and cost
reduction for maximum profits. Management accounting, however, is a broad type of accounting that covers areas
like budgeting, taxation, planning, decision making, risk management, making strategies and the analysis of future
trends.
7. Impact of Cost
Cost accounting deals with the majority of aspects of cost, such as allocation, distribution and thorough
auditing. Management accounting studies the impact of cost on management operations.
8. Planning
Short-term planning is focused on cost accounting, but management accounting deals with both short-
and long-term planning. High-level tools and techniques, such as probability structure and data sensitivity
analysis, are used in management planning for accurate planning.
9. Prerequisite
It is not possible to perform management accounting without cost accounting. However, cost accounting
is independent of any other type of accounting and can be performed without any prerequisites.
10. Future Decisions
Cost accounting provides the information necessary to make a future cost-related decision from evidence-based
historical cost data. On the other hand, historical and predictive data is used for future decision making in
management accounting.

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