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Introduction

Financial Accounting concentrates in the preparation of Trading Account, Profit and Loss Account and Balance Sheet. Profit and Loss Account shows the net profit of the organisation. And Balance Sheet shows the true financial position of the organisation. But the financial accounting does not concentrate on the operational efficiency of the organisation. Financial Accounting serves several functions to the organisation such as finance, administration, production but the operational efficiency of those functions is lacking. Apart from these activities, Financial Accounting has certain limitations. In order to overcome these limitations and to obtain more efficient operations of the organisation the cost accounting system is developed.