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Definition of Cost Accounting |
2. They main objectives of preparing financial Accounting Information is to enable Management to render accounts of its stewardship in terms of the profit generated in relation to the assets invested in the business. On the other hand, the primary purpose of preparing cost accounting information is to aid internal decision making in the organization.
3. The preparation of financial Accounting must conform with what is known as Generally Acceptable Accounting principles (GAAP) and government regulation. In Nigeria, the Nigerian Accounting Standard Board (NASB) issued statements of accounting standards to guide the preparation of published financial statement of companies operating in Nigeria. This is in addition to the operating in Nigeria. This is in addition to the relevant provisions of the 1990 companies and Allied Matter Act (CAMA). Such standardized rules are necessary to facilitate communication between the business and the outside world between the business and the outside world that may wish to compare the information from the business with that of an entirely different business. There is no such laid down rule for the preparation of Cost Accounting Information besides the unwritten rule that the information is useful enough for the decision that needs to be taken.
4. The primary emphasis of Cost Accounting is segment reporting. This means that the costs and sales of individual products or parts of the business are prepared for management in order to know the profitability of each product or part. In Financial Accounting, the focus of reporting is on the totality of the business rather than individual parts.
5. Information gathering on Financial Accounting is on what happened (historical) rather than what is going to happen. While Cost Accounting Information gathering is both historical basis and future basis. Historical basis is used for example in ascertaining cost of material issues to a production department, the future information aid in decision making.
6. Financial Accounting Information is prepared at a specified period of time (usually quarterly or yearly) whereas Cost Accounting Information is prepared only when needed by management.
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