Cost and Management accounting is about producing correct information in helping an entity’s management in decision making.
Cost and Management Accounting
Management accounting is used as input in the planning of projects, and as a technique for evaluating the performance how the goal of a firm has reaches in a given period. An important purpose for using management accounting is to compare the current financial information with the last year’s financials, in order to ascertain how well the set targets have been met or not. Cost and Management accounting is more specifically valuable for a firm in terms of strategy decision, budgetary control and project planning, and evaluation of performance.
What Is Management Accounting
Management accounting relates to the use of all such information collected and processed by cost accounting unit by management. Management accounting is about to collect the information from cost accountants and then uses it for decision making purposes.
The difference between cost and management accounting is Cost accounting deals with ascertainment, allocation, apportionment of costs. Management accounting deals with the effect and impact of costs on the business activities.
Another difference between cost and management accounting is Cost accounting provides a base for management accounting whereas management accounting is included and derived from cost accounting and financial accounting.
Cost Management Accounting Basics
Cost accounting is a method of accounting used for, to identify record and analyze various costs that are incurred by a firm. The costs that are analyzed under this cost accounting implies the cost of wages for labors, the raw material costs, utilities, supplies, maintenance and other overhead costs. The purpose of cost accounting is to identify wastage, and unnecessary expenditure in order to improve the firm’s efficiency and cut down on unexcessive costs, thereby increasing profitability. The importance in cost accounting where the revenues will be lower, and costs must be controlled more to ensure that the entity remains profitable. Cost accounting is mainly deals with to calculate and ascertainment of resources utilized for different business activities usually production, services and job works. It relates to calculation of per unit cost using different costing techniques and principles. The method of ascertainment of cost is differing from activities of the business. Cost Accounting Standards is a related term used in this topic, lot of time this world discussed on popular accounting books.
Generally, in summary form Difference between cost and management accounting,
> In cost accounting there is a prescribed formats for accounting but in management accounting there is no prescribed method for accounting.
> Cost accounting does not include tax planning and tax management whereas in management accounting includes financial and cost accounting, tax accounting and tax planning and management.
> Cost accounting is short term planning while Management accounting is both in short and long term planning.
> Cost accounting assists the management with functioning. Management accounting assists and evaluates the management performance.
> Cost accounting can be implemented with management accounting but management accounting cannot be installed without cost and financial accounting.
Cost and Management Accounting for various activities is almost in general format is followed for different business firms whereas for management accounting there is no prescribed format and its concerned with management oriented. Shortly I will add Cost and Management Accounting PDF in this post, It will helpful to you better than Cost and Management Accounting Tutorials already you have.
Originally posted 2013-09-29 05:48:17.