Skip to content

CMA Foundation · Fundamentals of Financial and Cost Accounting · Meaning and Significance of Cost Accounting and its Relationship with Financial Accounting

Which of the following is a feature of cost accounting that distinguishes it from financial accounting?

Cost accounting provides cost information for each product, job or process to help management take decisions. Financial accounting, in contrast, is driven by statutory needs and reports the overall result of the whole business, so the other options describe financial accounting instead.

  1. AIt is prepared mainly to meet statutory requirements under the Companies Act
  2. BIt provides cost information for each product, job or process to help management in decision-makingCorrect
  3. CIt records only external transactions with outsiders
  4. DIt reports only the overall profit of the entire business for the year

Explanation

Cost accounting focuses on ascertaining and controlling costs of products, jobs, processes and departments for management use. The other options describe financial accounting, which is statutory, external-transaction based and reports overall profit.

Did you get it right without looking?

One question tells you little. A timed set on Meaning and Significance of Cost Accounting and its Relationship with Financial Accounting shows your real accuracy, how long you take and where you lose marks.

Practise Meaning and Significance of Cost Accounting and its Relationship with Financial AccountingFree diagnostic mock

More Meaning and Significance of Cost Accounting and its Relationship with Financial Accounting questions