Versus Cost Accounting

financial accounting

Financial Accounting:

Financial Accounting is a systematical way to prepare the financial statements of an organization is order to get the true & fair view profit or loss. These financial statements are organized for decision making, stockholders, Banker, Supplier, Shareholders, Government Agencies, & other stakeholders. The basic requirement to prepare financial statement is to examine & reduce the dead expenses by measuring the expenses & income status & to reporting the result to interested users. These statements are organized for outsiders who do not participate in day to day organizational activities.
financial accounting

In depth financial accounting contains some principles, Ideas & Equation.

Basically they can say, "Financial accounting is the technique which includes recording, interpreting & summarizing date taken from financial records of an organization & bring it out in an annual document for the benefit of people outside the organization".

Accounting Equation: (ASSETS = LIABILITIES + OWNER'S EQUITY).

Financial accountants organize financial statements based on Accounting Principles which are usually accepted by a specific country. Financial statements must be prepared according to the (I FRS) International Financial Reporting Standards.

Accounting Cycle:

one. Voucher.
two. General Journal.
three. General Ledger.
four. Funds Book.
five. Trail Balance.
6. Trading profit & Loss Account.
7. Balance Sheet. Funds Flow Statement.

To start with the transaction occurs & noted in the form called Voucher. All transactions are available in vouchers. Then specific form is created called General Journal. All transaction recorded in form. The next step is Called Posting in which all separate heads/accounting recorded separately in different form/accounts called General Ledger. Funds Book is maintained to record the payments & recipes or organization. By the help of General Ledger the Trail Balance prepared which provides the items of Trading, profit & Loss account & Balance Sheet which shows the financial position & the health of the Organization. & finally Funds Flow Statement is prepared to drive the accrual inflow & outflow of funds.
financial accounting

Cost Accounting:

Cost accounting ascertains budget & actual cost of production, operations, departments, technique & the analysis of variance. Cost accounting is used to support decision-making to reduce cost of organization & improve its profitability. Cost accounting does not need standards as (GAAP) Usually Accepted Accounting Principles, as its primary use is for internal management, than outside people. A number of managerial accounting approaches are mentioned as under;

 Managerial Costing.
 Activity based Costing.
 Standard Cost Accounting.
 Resource Consumption Accounting.
financial accounting

 Classical Cost Elements:

 Raw Material.
 Labor.
 Factory Over Head/Indirect Expenses.