Limitations of Financial Accounting:
Financial accounting has several limitations that led to the development of cost accounting. Some of the key limitations include:
1. Focus on Historical Data: Financial accounting primarily focuses on recording past transactions and summarizing them in financial statements. This historical data may not always provide relevant information for decision-making and cost control.
2. Aggregated Information: Financial accounting reports provide aggregated information about the overall financial performance of a company. This may not be sufficient for internal management to identify specific cost drivers and make informed decisions.
3. External Reporting Requirements: Financial accounting is primarily geared towards meeting external reporting requirements such as tax compliance and investor communication. This may not address the internal cost management needs of a company.
4. Not Suitable for Management Decision-Making: Financial accounting does not provide detailed cost information required for internal management decision-making, such as product pricing, budgeting, and cost control.

Development of Cost Accounting:
To address the limitations of financial accounting, cost accounting was developed. Cost accounting focuses on analyzing, interpreting, and reporting cost information for internal management decision-making. Some of the key features of cost accounting include:
1. Cost Control: Cost accounting helps in identifying and controlling costs by analyzing cost behavior, cost drivers, and cost variances. This enables management to make informed decisions to improve cost efficiency.
2. Product Costing: Cost accounting provides detailed information about the cost of producing goods or services. This helps in setting competitive prices, evaluating product profitability, and making pricing decisions.
3. Budgeting and Planning: Cost accounting helps in preparing budgets, forecasting costs, and setting performance targets. This enables management to plan effectively and monitor performance against targets.
4. Decision Support: Cost accounting provides valuable information for decision-making, such as make-or-buy decisions, pricing strategies, and investment evaluations. This information helps management in making informed decisions to improve profitability.
In conclusion, cost accounting overcomes the limitations of financial accounting by providing detailed cost information for internal management decision-making and cost control. It plays a crucial role in helping companies optimize costs, improve profitability, and make informed strategic decisions.