Difference Between Cost Accounting and Management Accounting

Cost accounting is that branch of accounting which aims at generating information to control operations with a view to maximizing profits and efficiency of the company, that is why it is also termed control accounting. Conversely, management accounting is the type of accounting which assist management in planning and decision-making and thus known as decision accounting.

The two accounting system plays a significant role, as the users are the internal management of the organization. While cost accounting has a quantitative approach, i.e. it records data which is related to money, management accounting gives emphasis on both quantitative and qualitative data. Now, let’s understand the difference between cost accounting and management accounting, with the help of given article.

Content: Cost Accounting Vs Management Accounting

1. Comparison Chart
2. Definition
3. Key Differences
4. Similarities
5. Conclusion

Comparison Chart

Basis of Comparison	Cost Accounting	Management Accounting
Meaning	The recording, classifying and summarising of cost data of an organisation is known as cost accounting.	The accounting in which the both financial and non-financial information are provided to managers is known as Management Accounting.
Information Type	Quantitative.	Quantitative and Qualitative.
Objective	Ascertainment of cost of production.	Providing information to managers to set goals and forecast strategies.
Scope	Concerned with ascertainment, allocation, distribution and accounting aspects of cost.	Impart and effect aspect of costs.
Specific Procedure	Yes	No
Recording	Records past and present data	It gives more stress on the analysis of future projections.
Planning	Short range planning	Short range and long range planning
Interdependency	Can be installed without management accounting.	Cannot be installed without cost accounting.

Definition of Cost Accounting

Cost Accounting is a method of collecting, recording, classifying and analyzing the information related to cost. The information provided by it is helpful in the decision-making process of managers. There are three major elements of cost which are material (direct & indirect), labor (direct & indirect) and overhead (Production, Office & Administration, Selling & Distribution, etc.).

The main aim of the cost accounting is to track the cost of production and fixed costs of the company. This information is useful in reducing and controlling various costs. It is very similar to financial accounting, but it is not reported at the end of the financial year.

Definition of Management Accounting

Management Accounting refers to the preparation of financial and non-financial information for the use of management of the company. It is also termed as managerial accounting. The information provided by it is helpful in making policies and strategies, budgeting, forecasting plans, making comparisons and evaluating the performance of the management.

The reports produced by management accounting are used by the internal management (managers and employees) of the organisation, and so they are not reported at the end of the financial year.

Similarities

• Branch of Accounting
• Helpful in decision-making
• Prepared for a particular period.
• Not reported at the end of the financial year.

Conclusion

Both the cost accounting and management accounting are a part of accounting. They are helpful in for ensuring the smooth and efficient running of the business. On the basis of the information provided by the two entities various analysis are conducted. Cost accounting aims at reducing extra expenditure, eliminating unnecessary costs and controlling various costs. On the other hand management accounting aims at the planning of policies, strategy formulation setting goals, etc.