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CMA Intermediate · Cost Accounting · Reconciliation of Costing and Financial Profit

Closing stock is valued at ₹2,40,000 in cost accounts and ₹2,10,000 in financial accounts; opening stock is valued at ₹1,50,000 in cost accounts and ₹1,40,000 in financial accounts. Profit as per cost accounts is ₹6,00,000. Assuming no other differences, profit as per financial accounts is:

Financial profit is ₹5,80,000. Closing stock is ₹30,000 lower in financial books, reducing profit, while opening stock is ₹10,000 lower, raising profit. The net reduction of ₹20,000 is deducted from the cost profit of ₹6,00,000.

  1. A₹5,80,000Correct
  2. B₹6,20,000
  3. C₹5,60,000
  4. D₹6,40,000

Explanation

Closing stock lower in financial books by 30,000 reduces financial profit by 30,000. Opening stock lower in financial books by 10,000 increases financial profit by 10,000. Net effect is -20,000, so 6,00,000 - 20,000 = 5,80,000. Option B reverses the sign.

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