Describe the Difference in Managerial Accounting vs. Cost Accounting

3. Cost Accounting – A vital piece of management accounting, it fulfils both inward and outer groups to the association and is for the most part concerned with costs, costing and cost conduct.

Cost accounting is used by most companies whether manufacturing or service to keep track of their daily activities. It is essential in understanding the costs of running any enterprise. In other words they aid in determining the costs of inputs and outputs used in production. It involves analyzing and evaluating different approaches in order to determine the most suitable method that management can use suitably and one that can aid in future planning. Cost accounting is therefore an essential tool in decision making. Decisions made may involve pricing levels, future investment, production levels and coming up with a good competitive strategy. Different industries use different cost accounting method depending on the type of services provided or product manufactured.

 Managerial accounting is defined as the activities carried out in a firm to provide its managers and other employees with financial and related information to help them make strategic, organizational, and operational decisions.

This memo highlights segmented reporting and the variable approach to preparing income statements. Segmental reporting is necessary since there is a need to understand the cost data for each section. Proper cost allocation is critical to preparing the income statements, while it is also easier to identify the costs that are common and not attributable to any specific segment. Typically, the management analyzes the cost behavior by making the assumption that the total costs change occur because of change in level of a single activity (Slideshare, n.d.). The variable costing

More examples of managerial accounting would be how an individual Costco store is performing verses how the company as a whole is fairing against a competitor such as Walmart which this would be considered financial accounting. Another example for managerial accounting would be how a Costco store has lower turnover than another but for financial accounting it would come down to how the chain as a whole had performed. How Costco takes care of its employees by providing them with competitive wages and adequate healthcare while Walmart has low wages and inadequate healthcare this would be managerial accounting. Also how Costco’s employees seem to be more satisfied with their job and benefits they stay with the company where Walmart has a higher

Cost accounting is a type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step of production as well as fixed costs such as depreciation of capital equipment. Cost accounting will first measure and record these costs individually, then compare input results to output or actual results to aid company management in measuring financial performance (Cost Accounting, n.d.).

Management determines what they would like to include in the report. No authoritative body requires managerial accounting reports. Management carefully considers behavioral implications, when designing the managerial accounting system.

Feedback: Management accounting is the preparation and use of accounting information systems to achieve the organization's objectives by supporting decision makers inside the enterprise. LO 4

The primary difference between financial and managerial accounting is that financial accounting is used for external members of the company; they do not control or run the businesses’ operations. An example of external members would be customers and shareholders of the business. On the other hand, managerial accounting is used for internal members in the company such as managers and officers. The internal members use managerial accounting to increase efficiency and effectiveness within their company. According to accounting4management.com, financial accounting and managerial accounting have several differences, but they both depend on the same data.

Section “Management accounting basics” – Management accounting focuses mainly on the preparation of reports for the internal users of financial information, i.e. managers are all levels of the entity.

Management accounting uses financial information in a certain way that can help management with planning, decision making and control. In contrast to financial planning, managerial accounting provides helpful information to company managers so that they can control and plan company business activities. Cost accounting deals with pricing and stock valuation, while decision making deals with both the short and long-term decisions of the business (Jones, 2006).

According to Will S, Ray H, & Eric E.N. (2009), management accounting is a branch of accounting that is concerned with providing information to managers who direct and control the firm’s operations. Management directing function seeks to effectively use both the human and raw material wealth of a firm to achieve organizational set objectives on routine basis. Controlling function is the art of tele-guarding the activities of the organization to consistently fall in line with set objectives. Management accounting achieves this function through effective budgeting.

According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non management groups such as shareholders, cr->ors, regulatory agencies and tax authorities" (CIMA Official Terminology)

Previously, cost accounting was considered to be a technique for the ascertainment of costs of products or services on the basis of historical data. In time, due to the competitive nature of the market, it was realized that ascertaining of cost is not as important as controlling costs. Cost accounting started to be considered more as a technique for cost control as compared to cost ascertainment. Due to the technological developments in all fields, cost reduction has also come within the ambit of cost accounting. Cost accounting is, thus, concerned with recording, classifying and summarizing costs for determination of costs of products or services, planning, controlling and reducing such costs and furnishing of

As stated in the book, the cost management information system is one of two major accounting information systems within an organization. This subsystem’s burden is to generate outputs for internal users using processes needed to satisfy management objectives. Instead of being obliged by an external source’s criteria, it is ruled by people within the company. It differs from management accounting in that management accounting is more focused on how financial and nonfinancial information should be used for overall improvement and decision-making. It differs from cost accounting in that cost accounting measures and assigns costs in accordance with an external source, Generally Accepted Accounting Principles (GAAP).