Cost Accounting : Cost accounting is the branch of accounting which deals with recording cost with the objective of ascertaining, reducing and controlling cost. It includes the accounting procedures relating to recording of all income and expenditure and preparing periodical statement of costs and reports. The information provided by cost accounting is helpful in determining the prices of products and services, exercising control over the cost being incurred through estimating standard cost in advance and comparing with actual costs.

Financial accounting is a branch of accounting which involves recording of revenues, expenses, assets and liabilities of a business.
The main function of financial accounting is the preparation of financial reports which provide summary of a firm's financial condition. Income Statement or Profit & Loss Account and Balance Sheet are the end product of financial accounting. These financial statements provide vital information to various interested groups.

Following are the limitations of accounting:
(i) Only monetary transactions : Accounting records only those transactions which can be measured in terms of money. Transactions and events, that are not measurable how-so-ever important for business they may be, do not find a place in the accounts.
(ii) Ignorance of market price of assets : Assets are recorded at their costs and not at their market prices. Hence, financial statements fail to show real worth of the business.
(iii) Personal judgement : Based on the personal judgement of the accountant, certain accounting policies are adopted. As a result, financial statements may not be objective and comparable.
(iv) Not exact: Accounting information is sometimes based on estimates. Hence, the financial statements do not reflect the true position of the business.
(v) Not a good tool for management: Accounts record the past facts which do not help the management for decision-making. Accounts do not provide for evaluation of business policies and plans.

Following are the limitations of financial accounting:
(i) Incomplete information: The accountant measures only those events that are financial in nature, i.e., that are capable of being expressed in money. Nonmonetary items or events, however, significant they may be, are not measured or recorded in accounting. For example, competency of management, competition in the market, industrial relations, etc.
(ii) Inexactness: Accounting data is some-times based on estimations and it may be inaccurate. Therefore, profits and financial position disclosed by such accounts may not be true and exact. For example, stocks are also valued on some assumptions. Actual useful life of an asset cannot be accurately calculated for the purpose of depreciation.
(iii) Personal influence of accountant: Accounting may be influenced by the personal judgement of the accountant. He applies a choice between different methods of inventory valuation, depreciation methods, provision for doubtful debts, treatment of capital and revenue items and so on. Thus, due to lack of objectivity, income measured may not be true in certain cases.
(iv) Assets may not be shown at their real value: Fixed assets are shown at written down value, i.e., cost less depreciation. There may be a great difference between book value at which assets are shown and current replacement cost. Certain valueless assets are also sometimes shown in Balance sheet, such as, goodwill, patents and trademark, preliminary expenses, etc.
(v) Effect of price level changes not considered : Accounting statements are prepared at historical cost. Money as a measurement unit, change, it is not thus, considered while preparing Profit & Loss Account, thus, the accounting information will not show true financial results.
(vi) Non-monetary transactions are ignored: Financial statements record only monetary transactions. Certain important and valuable assets like Human Resources, do not find a place in a Balance sheet. This is because, there is no yard- stick to measure the value of Human Resources in monetary terms.