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What is difference between cost accounting and financial accounting?

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Financial accounting refers to the reporting of the financial position and performance of a firm to external users on a periodic basis. Reporting is carried out through financial statements including the balance sheet, income statement, statement of capital, and cash flow statement.. These statements are created to inform shareholders, creditors, or financial analysts.

Cost accounting means recording of all the costs incurred in a business. It first measures and records costs, determines the cost of producing a product or a service, then analyzes the data. This process is done primarily for management inside the business to control the company's operations and to support decision making.

Financial accounting statements have to be prepared in standard formats, cost accounting reports can be presented in whatever form management wants.

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