Get premium membership and access questions with answers, video lessons as well as revision papers.

Explain the meaning of the following terms in regard to the cost and financial accounting systems: i) Integrated cost accounts ii) Interlocking cost accounts iii) Cost ledger control account iv)...

      

Explain the meaning of the following terms in regard to the cost and financial accounting
systems:

i) Integrated cost accounts

ii) Interlocking cost accounts

iii) Cost ledger control account

iv) Cost ledger contra account

  

Answers


Martin
(i) Integrated Cost accounts:
This is a single comprehensive accounting system with no division between financial and cost
accounts. The same bases are used for depreciation and stock valuation and thus there is no need for
reconciliation between the cost profit and the financial profit. Financial profit will be cost profit
adjusted for any non-cost items such as income from investments.

(ii) Interlocking Cost Accounts:
This system uses separate cost accounts which are periodically reconciled with the
financial accounts. Different bases are adopted for depreciation and stock valuations. The
interlocking of the financial accounts and the cost accounts is carried out by the use of
control accounts in each set of accounts: i.e.

- A cost ledger control account in the financial accounts; and
- A financial ledger control account in the cost accounts

(iii) Cost Ledger Control Account
This is a memorandum account (not part of double entry) maintained in the financial
accounts. In it is posted all entries which are to be transferred to the cost accounting system.

(iv) Cost Ledger Contra Account
Also called a Cost Ledger Account, financial ledger control account or a general ledger
control account. It is maintained in the cost accounts as part of the double entry. It also
enables the financial and cost ledgers to be interlocked because it must agree with the
memorandum cost ledger control account in the financial accounts.
marto answered the question on February 21, 2019 at 06:48


Next: Printa Limited is a large printing company, which has an on-line computer accounting system. The system is based around a central main frame computer, with...
Previous: Working papers provide the audit evidence. They can be categorized into: i. Auditors‘ prepared working papers. ii. Client‘s schedules used as working papers. iii. Audit programmes. Working papers are...

View More CPA Cost Accounting Questions and Answers | Return to Questions Index


Learn High School English on YouTube

Related Questions