What are the limitations of financial accounting that have led to the development of cost accounting?
Understand the Problem
The question is examining the nature and scope of accounting, with a focus on the limitations of financial accounting that have led to the development of cost accounting.
Answer
Financial accounting lacks insight into operating efficiency and detailed results, prompting cost accounting's development.
Financial accounting has limitations such as not providing a clear idea of operating efficiency and not identifying weaknesses in collective results, which led to the development of cost accounting.
Answer for screen readers
Financial accounting has limitations such as not providing a clear idea of operating efficiency and not identifying weaknesses in collective results, which led to the development of cost accounting.
More Information
Cost accounting offers detailed insights into cost management, addressing the shortcomings of financial accounting by providing information on efficiency and identifying specific areas for improvement.
Tips
Avoid assuming financial accounting details operating sectors' efficiencies; it mainly summarizes overall business performance.
Sources
- Limitations of Financial Accounting - financestrategists.com
- Limitations of Financial Accounting - unacademy.com
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