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CMA Foundation · Fundamentals of Financial and Cost Accounting · Cost, Cost Centre, Cost Unit and Cost Drivers

Which of the following is a feature of cost accounting rather than of financial accounting?

Cost accounting chiefly supplies cost information to management for internal purposes such as pricing, cost control and decision-making. Statutory reporting to shareholders, recording only external transactions and rigid legally prescribed formats are characteristics of financial accounting, not cost accounting.

  1. AIt supplies cost information for internal decision-making such as pricing and cost controlCorrect
  2. BIt is prepared mainly to meet statutory reporting for shareholders
  3. CIt records only the external transactions of the business with outsiders
  4. DIt follows rigid formats prescribed by company law for presentation

Explanation

Cost accounting mainly serves management by providing cost data for pricing, control and decisions. Statutory reporting, external transactions and prescribed formats are features of financial accounting.

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