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CMA Intermediate · Cost Accounting · Introduction to Cost Accounting

Which one of the following is a distinguishing feature of cost accounting as compared with financial accounting?

Cost accounting analyses costs by product, job, process or department and can be prepared for short periods like a week or month, as management needs. Financial accounting reports the whole entity, usually annually, in a statutory format.

  1. AIt is governed by the Companies Act for its format and disclosure
  2. BIt analyses cost by product, job or department and can be prepared for periods shorter than a yearCorrect
  3. CIt reports only on the firm as a whole for the full year
  4. DIt is a statutory requirement for every business irrespective of size

Explanation

Cost accounting provides cost data by unit, job, process or department and can be prepared daily, weekly or monthly as management needs. Financial accounting reports the whole entity annually in a statutory format, so the other options describe financial accounting or are incorrect.

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