Know the Difference Between Cost Accounting and Management Accounting

The main purpose of cost accounting is to analyse, calculate and control costs in an organisation. While on the other hand, the central purpose of management accounting is to provide non-financial and financial information to assist in planning, decision-making, and control. 

To learn about Financial Accounting Terms, look here. 

Comparison- Cost Accounting Vs. Management Accounting

There are many differences between cost accounting vs. management accounting. Let’s glance at these distinctions in detail with the help of this table.

If you are interested in finance management, look here to know the  Meaning Of Finance Management as well as the various Key Scope of Financial Management.

Below are the differences between cost accounting and management accounting in terms of advantages and disadvantages they carry.

Pros and Cons of Cost and Management Accounting

Pros of Cost Accounting:

• Control of costs
• Sound pricing decisions
• Evaluation of performance
• Efficient resource allocation

Cons of Cost Accounting:

• Emphasises historical data
• Scope is limited
• More simplified allocation of costs
• Compromises long-term innovation or growth

Pros of Management Accounting:

• Supporting decisions
• Planning strategically
• Flexibility
• Appropriate measurement of performance

Cons of Management Accounting:

• Interpretations are often subjective
• Implementations are quite costly 

What Are the Advantages of Using Cost Accounting and Management Accounting?

Cost accounting enjoys the following benefits:

• Cost control
• Pricing decisions
• Performance evaluation.

Management accounting enjoys the following benefits:

• Strategic planning,
• Measurement of performance
• Management of risk
• Allocation of resources
• Adaptability and flexibility.

Conclusion

This has been a guide to Cost Accounting vs. Management Accounting. Here we discuss the top difference between cost accounting and management accounting. Basically, understanding the difference between cost accounting and management accounting is essential for individuals involved in financial management within organisations. While both disciplines share some similarities, they have distinct focuses and objectives. By recognising the unique contributions of cost accounting and management accounting, individuals can effectively utilise these disciplines to drive financial success and optimise organisational performance.