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CMA Intermediate · Cost Accounting · Cost Book-Keeping

In an integral accounting system followed by a manufacturing company, which feature distinguishes it from a non-integral system?

An integral accounting system maintains one set of books for both cost and financial transactions, so only one profit is determined and no reconciliation statement is needed. Non-integral systems keep separate cost and financial ledgers and must reconcile their profits.

  1. ASeparate sets of books are kept for cost and financial records, to be reconciled later
  2. BA single set of books records both cost and financial transactions, so no reconciliation statement is neededCorrect
  3. CCost records are kept only for work-in-progress and not for materials
  4. DFinancial accounts are prepared only at the end of the costing period from the cost ledger

Explanation

In an integral system, cost and financial accounts are combined in one ledger set, so there is one profit figure and no reconciliation between two profits is required. Option A describes the non-integral system, which keeps separate books and therefore needs reconciliation.

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