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

Which of the following statements about the difference between cost accounting and management accounting is correct?

Management accounting has a wider scope than cost accounting. It draws on financial and cost data to help managers plan, control and take decisions, whereas cost accounting focuses mainly on ascertaining, allocating and controlling costs.

  1. ACost accounting deals only with future costs while management accounting deals only with past costs
  2. BManagement accounting has a wider scope than cost accounting, drawing on financial and cost data to support managerial decisionsCorrect
  3. CCost accounting is statutorily required for all companies irrespective of turnover or industry
  4. DManagement accounting is governed by mandatory accounting standards in the way financial accounting is

Explanation

Management accounting uses both financial and cost information and covers planning, control and decision-making, so it is wider in scope. Cost accounting is not required for all companies, only for notified classes, and management accounting has no mandatory standards framework like financial accounting.

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