Cost Accounting
Cost accounting, often referred to as managerial or management accounting, is the branch of accounting that provides economic and financial information to decision makers within a company. The idea of providing information for use within the company (to aid management to plan, direct, and control operations) differentiates cost accounting from other segments of the accountancy profession. For example, financial accounting serves the public by providing financial reporting via financial statements, financial press releases and such. This public information is prepared and presented based on generally accepted accounting principles (GAAP), the broad rules that assure the user of the underlying framework supporting the information.
On the other hand, cost accounting is limited predominantly to use within the company to aid management in the process of making choices that will benefit the stockholders by maximizing company profits that translate into maximizing stockholder wealth. Since the information is used internally, the information may be presented on any logical basis just so long as it will aid the manager to reach an appropriate, informed decision.
A few concepts in cost accounting, however, form the bridge between financial and managerial accounting topics. One such concept is that of product costing for a manufacturing company.
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