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Differences between cost accounting and management accounting


Cost accounting and management accounting both have more or less same objectives for the management. In spite of the similarities, there are certain differences between these two accountings.

Some of the differences between cost accounting and management accounting are summarized as follows :

(i)                 Base. Cost accounting develops a strong base for management accounting. But the management accounting is developed from both financial accounting and cost accounting.

(ii)               Purpose. Cost accounting takes necessary steps for collecting data in order to help the management. But management accounting supplies all accounting information to the management for solving all business problems.

(iii)             Nature of data used. Under cost accounting only quantitative aspect is recorded. But in the management accounting, both quantitative and qualitative information are to be recorded.

(iv)             Object. The primary objective of cost accounting is to ascertain the cost of producing a product or providing a service. But the aim of the management accounting is to provide information to the management for the overall operational activities of the business.

(v)               Tools techniques. Standard costing, variance analysis, break even analysis etc., are the important tools and techniques of cost accounting. But in the case of management accounting not only the standard costing, variance Analysis, break even analysis but also fund flow statement, cash flow statements, ratio analysis etc. are the tools and techniques of this accounting.

(vi)             Installation of the system. Cost accounting can be installed without the support from management accounting. When the organization decides to install management accounting, it should obtain some basic details from the cost accounting and financial accounting. But management accounting can be installed· in the organization to obtain some of the basic support from the financial accounting and cost accounting.