Cost Accounting Intro Part 2 ( Cost Accounting , Financial Accounting and Management Accounting

Hi guys so welcome back to my youtube channel so for today’s video we will continue the discussion of course accounting and control introduction part two which we will discuss the second learning objective so as a review our learning objective for today will be the definition of cost accounting and its relation to financial accounting and management so

Let’s start okay so before we proceed to the formal definition of cost accounting and control i think it would be better if you will discuss first the three terms separately so let’s start submarine costs accounting and control so an cospo is an amount that has to be paid or given up in order to get something so basically if you want something you have to

Give something first but so let’s say for example you want to buy however for this course angkos langpo nathan is specific for the monetary values if it cannot be measured in terms of money in the pocos i although all the resources that can be measured in terms of money so next of course is the process of recording financial transactions pertaining

To a business the accounting process includes summarizing analyzing and reporting these transactions to oversight agencies regulators tax collections and entities then last part we have the cost control orient control control is the practice of identifying and reducing business expense to increase profit and start with the budgeting process so as you can see

Nagaru nagata nang visual visual okay so for the formal definition of cos accounting so this is the definition cos accounting is a system that records summarizes analyzes and interprets the details of course to be used for external reporting and internal reporting so basically internal reporting external reporting so anko’s accounting process is considered

As two-edged sword in financial accounting management financial accounting it talks about for external reporting at young management accounting and seo internal report team so punta munata don’t branch down accounting which is young financial accounting so financial accounting is the field of accounting concerned with the summary analysis and reporting of

Financial transactions related to business this involves the preparation of financial statements available for fabric use so if young we’re in inaudible ultimate user are the stakeholders so angkos accounting inauguration data for financial accounting purposes report the financial position organized financial performance and company through the issuance of

The general purpose financial statement so basically ginagamit accounting is a financial accounting side in order to prepare the general purpose financial statement we’re in the discus basic accounting statement of comprehensive income statement of financial performance then statement of financial position statement of changes in equity statement of cash flow

Chemical information presents a financial accounting some of them in gagalink accounting so another edge nankosh accounting is this is also used for management accounting now management accounting for it internal reporting market internal deporting from the work itself management accounting the user of the information is the management or the managers next

Step in order to uh to do their function so anubayong management accounting so this is the definition of management accounting management accounting is the process of preparing reports about business operation that helps managers make short-term in long-term dc short so manager as an internal uh internal client or an internet client because accounting young

Information records accounting further needs the boundary manager so normally the reports generated by management accounting accounting special reports such as variance analysis performance reports by department etc difference between financial accounting and management accounting and ultimately how cost accounting will help both branches of accounting okay

So let’s differentiate financial accounting and management accounting will help these two branches of our team so number one it differentiates monat and sila as to users so as the users say financial accounting and adding username is young external persons or young attenborough stakeholders actually pak financial accounting federal external and internal pero

Enforcement is external reporting assay i’m adding output and assume general portfolio’s financial statements so as to management accounting and user phone information accounting is young manga managers managers is internal to the company because they are employed in a company and there are tasks to make sound decisions based on the information provided by

The cost accountant so next style is the time for financial accounting more on historical perspective if we say historical perspective financial accounting are all pascos show so we are dealing with estimated costs next how about verifiability versus relevance as fast as far as financial accounting is concerned the emphasis is on the objectivity and source

Document since we are talking about past expense or pass transaction so of course validated the unknown source document is objectivity verifiability source document however in management or satisfying the specific needs of our managers which is internal user how about the precision and timeliness so financial accounting emphasize reports report with reasonable

Assurance then some management accounting how about subject so the subject in financial accounting primarily focus in on company white reports if you say white reports yet general purpose financial statement if you say general purpose financial statement statement of is position stakeholders alexa management accounting and subject for primary focus on segment

Reports so pakistan at insertment reports let’s say for example we have five departments there was a management accounting report from the host department required five so one free to make uh reports based on the needs of their management your unique needs management okay they then they are not obliged to follow that general generally accepted accounting

Principles then last we have the requirements as i mentioned earlier so aside from we need to follow the generally accepted accounting principle in financial accounting we are also mandated for um we are also mandated to report our financial status and financial performance external because meron tayo manga government agencies the nago persian such as young

Security exchange commission and bir so i encourage external reports mandatory uh financial accounting that we are covered by the by that mandatory agencies however in management accounting since the ultimate user are the management itself or your manager slanderman so we are not obliged to to give financial data management data supports accounting a government

Agency example puny anyone atting pricing method and pricing method is a kind of internal report specific for management purposes so young pricing method in demo required the essence of the external client or external report casino we are not mandated to do that now ifrs in general accepted about invisible principles pero as far as the management accounting

Is concerned since we are not mandated to send this kind of report since it is a management accounting report then we are not we are not mandated to send them so okay as a review as you can see cos accounting is uh the combination of financial accounting and management accounting so independent separate branch of accounting as a cost accounting supplements

Both financial accounting and management accounting as we discussed earlier on cost accounting provider information k financial accounting for external reports and at the same time napo providing information the cost accounting management accounting for external reporting such as the reports needed by the management or the managers

Transcribed from video
Cost Accounting Intro Part 2 ( Cost Accounting , Financial Accounting and Management Accounting By Sir Jeremy CPA