Write-up

MANAGEMENT ACCOUNTING V/S COST ACCOUNTING

Faculty of Management Studies Banaras Hindu University

Submitted to: Dr. Anindita Chakraborty

Submitted by:Prateek Dave Roll no. 33 MBA (IB) 2nd semester

Introduction
Management accounting provides management with accounting information for the purpose of planning and running a business. It was developed because of managements demands for information on past and present operations to predict future trends. It is very important in planning and running a business as well as in taking important managerial decisions. Now, it does so by integrating cost and financial accounting information. Therefore, the scope of management accounting is broader than that of cost accounting.

Definitions
Management Accounting According to the Institute of Cost & Works Accountant of India, Management accounting is a system of collection and presentation of relevant economic information relating to an enterprise for planning, controlling and decision making. Cost Accounting Cost Accounting is a branch of accounting that is designed to measure the economic resources exchanged or consumed (or that will be exchanged or consumed) in producing goods or services.

Difference between Management accounting and Cost Accounting

1. Primary Objective The main objective in cost accounting is to ascertain the cost of a product or service and to control the cost after careful analysis. In case of management accounting, it is provide the relevant information to the management to help it in making appropriate decisions. 2. Principles Cost accounting uses principles of cost accounting like concept of normal and abnormal cost, concept of materiality etc. Management accounting, on the other hand, uses principles of both cost and financial accounting 3. Nature of Approach Since, in cost accounting, the objective is to ascertain and control the costs, it generally deals with current operations. Management accounting is used for preparing long-term plans apart from using it for current operations.

4. Scope of study Cost accounting involves cost ascertainment, cost control and maintaining cost records in form of cost books, vouchers and ledgers etc. Management accounting is an extension of cost accounting and financial accounting so it involves things like budgeting, planning, forecasting etc. in its scope. 5. Term of planning Cost accounting is concerned with short-term planning only. Management accounting is concerned with both short-term and long-term planning. 6. Accounting period Cost accounting, like financial accounting, is done for a specific accounting period. Management accounting doesnt follow any specific accounting period as such. 7. Data used In cost accounting, only those transactions are taken which can be expressed in figures i.e. only quantitative aspect is recorded in cost accounting. Management accounting uses both qualitative and quantitative information.