Skip to content

CMA Intermediate · Cost Accounting · Cost Book-Keeping

In a non-integrated system, a firm's Cost Ledger Control Account shows opening balance Rs 2,40,000 (credit). During the period: materials purchased Rs 1,50,000, wages paid Rs 90,000, factory expenses paid Rs 60,000, sales realised Rs 4,00,000 (credit side of Costing P&L transfers aside), and cost of sales transferred Rs 3,30,000 with profit Rs 70,000 credited. The Cost Ledger Control Account is credited with materials, wages, expenses and profit, and debited with sales. What is its closing credit balance?

The closing credit balance is Rs 2,10,000. Total credits are opening 2,40,000, materials 1,50,000, wages 90,000, expenses 60,000 and profit 70,000, totalling 6,10,000. Deducting sales of Rs 4,00,000 debited gives the closing balance.

  1. ARs 1,50,000
  2. BRs 2,10,000Correct
  3. CRs 3,10,000
  4. DRs 2,40,000

Explanation

Credits: opening 2,40,000 + materials 1,50,000 + wages 90,000 + expenses 60,000 + profit 70,000 = 6,10,000. Debit: sales 4,00,000. Closing credit = 6,10,000 - 4,00,000 = 2,10,000. Check: net assets in cost books (stock etc.) equal this balance. Ignoring profit gives 1,40,000, and using sales as credit would be wrong.

Did you get it right without looking?

One question tells you little. A timed set on Cost Book-Keeping shows your real accuracy, how long you take and where you lose marks.

Practise Cost Book-KeepingFree diagnostic mock

More Cost Book-Keeping questions