Management vs Cost Accounting: Difference and Comparison

Management Accounting is a type of accounting in which one needs to present and provide account-related information to the management in an organized and proper way so that it can accomplish its administrative functions of arrangement, supervising, and decision-making in a productive and well-ordered manner.

Cost Accounting deals with recording, classifying, and summarizing costs for products or services, arrangement, controlling, and reducing costs and also helps in decision making.

Key Takeaways

1. Management accounting focuses on providing managers with relevant financial and non-financial information for decision-making, planning, and controlling business activities.
2. Cost accounting is a subset of management accounting, concentrating on recording, analyzing, and allocating costs to products, services, or departments for cost control and pricing.
3. Both disciplines support informed decision-making, with management accounting providing broader insights, while cost accounting specifically targets cost management and efficiency.

Management Accounting vs Cost Accounting

The difference between Management Accounting and Cost Accounting is that Management accounting gives us all accounting details, whereas Cost accounting gives us just cost points for managerial motives.

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Comparison Table

Parameter of Comparison	Management Accounting	Cost Accounting
Objective	The key objective of Management Accounting is to give good details to management for decision-making.	The key objective of Cost Accounting is to give deduce and control costs.
Types of Transactions	It deals with both financial and non-financial transactions.	It deals only with financial transactions.
Basis	This accounting purely deals with future transactions.	This type of accounting deals with both present and future transactions.
Scope	Management accounting has a broader scope as it covers the regions of financial accounts, cost accounts, and tax accounts.	Cost accounting has a confined scope as it covers matters only related to cost control.
Utility	Management accounting helps just for the needs of intramural management.	This accounting helps with the needs of both external and internal parties.

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What is Management Accounting?

Management Accounting is a tool to help the management secure better planning and control over the organization.

Many institutions hire educated management accountants like ICMA, CIMA, ICWAI, etc. It purely works for internal parties and management.

What are the objectives of Management Accounting?

1. Cash Flow Management
2. To motivate the workforce
3. Cost control
4. To reduce tax expenses
5. Better planning for future policies

What are the functions of Management Accounting?

1. New product analysis
2. Profitability
3. Aids in Financial Accounting
4. Variance analysis
5. Break-even analysis

 

What is Cost Accounting?

Cost accounting is a type of accounting process that aims to apprehend a company’s cost of production by evaluating the input cost of each step of production and fixed price, such as the devaluation of capital appliances.

What are the objectives of Cost Accounting?

1. Guide to business policies
2. Ascertainment of Cost
3. Cost reduction and cost control
4. Determination of Selling price
5. Estimation of Cost

What are the functions of Cost Accounting?

1. To compute product-wise profit
2. To calculate the cost per unit
3. To install and implement cost control systems

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Main Differences Between Management Accounting and Cost Accounting

1. In Cost Accounting, some industries have made the conservation of cost records compulsory. In Management Accounting, conserving the cost records is not mandatory but purely voluntary.
2. Cost Accounting works only on short-range planning, whereas Management Accounting works on short-range and long-range planning.

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References

1. https://doc1.bibliothek.li/aaw/FLMF019840.pdf
2. https://ejbe.org/EJBE2010Vol03No06p113UYAR.pdf