i. Some items are shown in the income and expenditure in financial accounts (e.g. interest on capital or received, revaluation losses/profits, gain /loss on sale of fixed assets, goodwill, donations, income tax paid, etc.), but not in cost accounts.
ii. Some items are shown only in cost accounts (e.g. interest on capital employed in production, losses due to spoilage of defective items, etc.), but not in the financial accounts as they do not represent any transactions with outsiders.
iii. Over or under absorption of overheads financial accounts, overheads are charged with the actual amount whereas in cost accounts, overheads are charged based on a predetermined percentage.
iv. Differences in stock valuation: In cost accounts, the stock is valued only at its cost, and price, whereas in financial accounts, the stock is valued at cost or market price.
v. Differences in methods of charging depreciation: In financial accounts, depreciation may be calculated on reducing balance or straight-line method, whereas in costing accounting, depreciation is charged based on the asset (machine hours).
vi. Abnormal gains and losses: Abnormal gains and losses (e.g. Goods lost by fire, theft, accident, or idle time, etc.) are shown in financial accounts but excluded from cost accounts.