Though there is much common ground between Financial Accounting and Cost Accounting and though in fact cost accounting is an outgrowth of financial accounting yet the emphasis differs. Firstly financial accounting is more attached to reporting the results of the business to persons other than internal management – government, creditors, investors, researchers, etc. Cost accounting is a system of internal reporting for an organization’s own decision-making management. Second, financial accounting data is of a historical nature and its reporting periodicity is much broader. Cost accounting is much less concerned with short-term planning than with financial accounting and its reporting period. It deals not only with historical data, but also with the approach of futurism.Thirdly in financial accounting, the major emphasis in cost classification is based on the type of transaction e.g. salaries, repairs, insurance, stores, etc. But in cost accounting, the major emphasis is on functions, activities, products, processes and on internal planning and control and information needs of the organization.

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