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Cost accounting vs financial accounting

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The General Manager of a company has decided to employ a cost accountant. He has asked you, the financial controller, to write a memorandum to the members of the Board of Directors outlining why cost accounting is necessary, and how it differs from financial accounting.

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To: The Board of Directors
From: Financial Controller
Subject: The Importance of Cost Accounting & how it differs from Financial Accounting
Date: April 4, 2013

In the accounting world, there are several different types of accounting that are used by firms. These include, financial accounting, management accounting, cost accounting, governmental accounting, tax accounting, forensic accounting and social accounting. In our company, we mainly use financial accounting, management accounting and cost accounting.

Financial accounting, or financial ...

Solution Summary

This solution first gives a brief definition of financial accounting, as well as management and cost accounting. It tells the main difference between financial accounting and management accounting (by extension cost accounting). It then seeks to give several reasons as to why cost accounting is necessary in firms today. [348 words]