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.
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.
Management Accounting vs Cost Accounting
The main 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.
Comparison Table Between Management Accounting and Cost Accounting (in Tabular Form)
| Parameter of Comparison | Management Accounting | Cost Accounting |
|---|---|---|
| Objective | The key objective of Management Accounting is to give useful details to management for decision-making. | The key objective of Cost Accounting is to give deduce and control costs. |
| Types of Transactions | It deals both with financial and non-financial transactions. | It deals only with financial transactions. |
| Basis | This type of accounting purely deals with future transactions. | This type of accounting deals both with present and future transactions. |
| Scope | Management accounting has a wider 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 control of cost. |
| Utility | Management accounting helps just for the needs of intramural management. | This accounting helps for the needs of both external and internal parties. |
What is Management Accounting?
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.
What are the objectives of Management Accounting?
- Cash Flow Management
- To motivate the workforce
- Cost control
- To reduce tax expenses
- Better planning for future policies
What are the functions of Management Accounting?
- New product analysis
- Profitability
- Aids in Financial accounting
- Variance analysis
- 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 as well as fixed cost such as the devaluation of capital appliances.
What are the objectives of Cost Accounting?
- Guide to business policies
- Ascertainment of Cost
- Cost reduction and cost control
- Determination of Selling price
- Estimation of Cost
What are the functions of Cost Accounting?
- To compute product-wise profit
- To calculate cost per unit
- To install and implement cost control systems
Main Differences Between Management Accounting and Cost Accounting
- In Cost Accounting, conservation of cost records has been made compulsory in some industries whereas, in Management Accounting, it is not made compulsory to conserve the cost records and made purely voluntary.
- Cost Accounting works only on short-range planning whereas Management Accounting works both on short-range and long-range planning.
Conclusion
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.
References
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