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CA Intermediate · Cost and Management Accounting · Cost Accounting Systems

In an integrated accounting system followed by a manufacturing company, which of the following is a distinguishing feature compared with a non-integrated (non-integral) system?

In an integrated system a single set of books records both cost and financial transactions, so there is only one profit figure and no reconciliation statement is needed. Separate books, a Cost Ledger Control Account and a Memorandum Reconciliation Account belong to non-integrated systems.

  1. ASeparate sets of books are kept for cost accounts and financial accounts
  2. BA single set of books records both cost and financial transactions, so no reconciliation statement is neededCorrect
  3. CCost Ledger Control Account is maintained to balance the cost books
  4. DMemorandum Reconciliation Account is prepared to explain profit differences

Explanation

Integrated accounting merges cost and financial accounting in one set of books, so there is one profit figure and no reconciliation is required. Options A, C and D describe non-integrated (cost ledger) systems, where separate books, a Cost Ledger Control Account and a reconciliation are needed.

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