Difference Between Management Accounting and Cost Accounting (With Table)

Management Accounting vs Cost Accounting

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 a proper way so that it can accomplish its administrative functions of the arrangement, supervising, and decision-making in a productive and in a well-ordered manner. The main aim of management accounting is to give information for intramural decision-making, with a focus on planning and control purposes.

Cost Accounting is a type of accounting that deals with recording, classifying, and summarizing costs for products or services, arrangement, controlling, and reducing costs and also helps in decision making. It calculates and announces information related to the cost of utilizing resources. It is popularly known as a specialized branch of accounting. It involves categorization, aggregation, and control of costs.

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

Management Accounting is a tool to help the management in securing better planning and control over the organization. Many institutions hire very educated management accountants like ICMA, CIMA, ICWAI, etc. It purely works for internal parties and management. It informs internal decisions, gives feedback on operating presentation of the businesses. It also calculates financial performances. This accounting employs unique approaches like level of costing, budget control, management costing, ratio inspection, responsibility accounting, etc. 

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
6. Controlling Management Performance
7. Interprets financial details
8. Proper and accurate decision-making
9. Calculation of Profit and Loss

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
6. Stock valuation
7. Capital budgeting analysis
8. Forecasting

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 as well as fixed cost such as the devaluation of capital appliances. Cost accounting is mostly used in an organization or in a company or a firm to aid decision making. Cost accounting can be very favourable and helpful as a piece of equipment for management in setting up budget and cost control programs, which can upgrade total net margins for the company in the future.

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
6. Smooth the preparation of financial and other statements
7. Helps in decision-making
8. Provides Statistical Data
9. Helps in preparation of budget
10. Helps in the presentation of correct information and accurate details 

What are the functions of Cost Accounting?

1. To compute product-wise profit
2. To calculate cost per unit
3. To install and implement cost control systems
4. To establish an effective reporting system
5. To prepare a correct cost analysis
6. To advice management for future expansion
7. To provide needful information for the determination of selling price
8. To ascertain the wastage in each process of manufacture

Both the terms discussed are the two different types of Accounting. In the world of multi-skill companies and organizations, Management Accounting has become a necessary part of management which helps in decision making and provides guidance to the organization or the company at each step.

Management Accounting increases the regulation of the management and boosts up the working speed and determination of employees and promote them with confidence. Cost accounting has to undergo limitations of Management Accounting. Cost Accounting depicts the costs of single units and conquer the financial accounting. Its main goal is to dapple the regulation and inefficiencies in the use of facts, data, labour workers, apparatus.

The following is a collection of the most used terms in this article on Management Accounting and Cost Accounting. This should help in recalling related terms as used in this article at a later stage for you.