>> October 21, 2008
Financial accounting, cost accounting and management accounting are interrelated because without co-ordination and co-operation with each other, we will never succeed in achieving the objectives of business. Financial accounting provides different financial statements. On these statements we calculate different cost, like cost of material, cost of labour, and cost of overheads. On the basis we calculate cost of goods sold and then we include our profit margin in it and the ascertain our product price. In management accounting, financial and cost accounting supply different useful accounting information. On these accounting data manager makes the plans of business. Organize different works. Even standard costing and budgeting is very useful toots for controlling the organization. In a business the requirement of funds has to be carefully estimated. Certain funds are required for long term purpose investment in fixed assets etc. A careful estimation of such funds depends different ratio analysis which tells us that what is rate on capital employed, if this rate is very high then we can get more fund for more production and for more production give more money. Even financial management is also part of management accounting. If system of financial accounting will complete with good way and rules and regulation, then other system of cost accounting and management accounting will gives good result.
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