What is the difference between Cost Accounting and Internal Accounting?
In principle, Cost Accounting and Internal Accounting have the same objectives. The considerable difference, is that Internal Accounting requires a specific detailed Chart of Accounts configured from a company’s internal structure, and integrates a precise methodology of accounting principles and procedures using that structure to arrive at the most accurate cost of product. The definition of Cost Accounting as established in the Management Accounting Terminology booklet, reads: “It is a technique or method for determining the cost of a process… the Cost is determined by direct measurement, systematic assignment and rational allocation.” To be most effective, the technique, method, measurement, assignment and allocation requires a very special accounting structure. The necessary internal procedures and transactions belong to a whole new system arrangement. A new Internal Chart of Accounts. We will NOT be able to establish a good picture of these procedures if we ONLY USE the Financia
