An Interface Between Financial Accounting and Cost & Management Accounting and Some Concepts of Strategic Cost Management

1946 Words Mar 20th, 2009 8 Pages
Introduction:
The basic objective of accounting is to provide information that is useful in making business and economic decisions. What makes accounting information useful for decision-making? The answer is however the accounting information confirms to the qualities that should be possessed by the financial and cost & Managerial reporting. In view and addition to this, the importance of strategic cost management and costing techniques like Activity based costing should not be underestimated. This implies that organization should be installing appropriate framework of strategic cost management to reduce its costs in key areas on which the success of organization is heavily dependent.

Objective of the study:
The Project is presented with
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It is used to prepare accounting information for people outside the organization or not involved in the day to day running of the company. In a Nutshell, it is primarily for external purposes. ✓ Cost & management accounting serves the following purposes:
The purpose of Cost & Management accounting is to enable management to get as for as possible the exact cost of goods manufactured or services rendered, to furnish necessary facts and figures for adequate and effective managerial control and to provide management data necessary to determine output and products that will result in most profitable operations. The purpose of cost accounting is to assess the profitability of a product or services, a department or the organization. In a Nutshell, it is primarily for internal purposes.

3. Stock Valuation Principles:
In financial accounting, stock or inventory is valued at cost or net realizable value (NRV) whichever is lower while in Cost accounting, inventory is valued at Cost.

4. Regulation: Financial Accountants follow GAAP (generally accepted accounting principles) set by professional bodies in each country, accounting concepts (as laid down by the Accounting Standards Board) plus statutory requirements of the Companies Acts.
While in Cost & management accounting it is tailored to suit the needs of the users or may follow CAS. and Standardization: Accounting standards of financial accounting is issued by the Institute of chartered accountants of India
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