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CA Intermediate · Cost and Management Accounting · Introduction to Cost and Management Accounting

Which of the following best describes the principal difference between cost accounting and management accounting as taught at the Intermediate level?

Cost accounting concentrates on ascertaining, recording and controlling costs, whereas management accounting takes cost and financial data and presents it to help management in planning, control and decision making. The distinction is one of focus and purpose, not of sales versus purchases or timing alone.

  1. ACost accounting is concerned only with sales, while management accounting deals only with purchases
  2. BCost accounting focuses on ascertaining and controlling costs, while management accounting uses cost and financial data to support managerial planning and decisionsCorrect
  3. CCost accounting is mandatory for all firms by law, while management accounting is prohibited
  4. DCost accounting deals with future events only, while management accounting deals with past events only

Explanation

Cost accounting records, classifies, ascertains and controls costs. Management accounting draws on cost and financial information to help management plan, control and decide. The other options misstate scope or legal status.

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