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CA Intermediate · Cost and Management Accounting · Cost Accounting Systems

In an integrated accounting system, where cost and financial accounts are maintained in a single set of books, which of the following is a feature of that system?

Reconciliation is not required in an integrated system because cost and financial records are kept in one set of books, giving a single profit figure. A Cost Ledger Control Account belongs to non-integrated systems, where separate books are maintained and must be reconciled.

  1. AA separate Cost Ledger Control Account is needed to balance the cost books
  2. BReconciliation of profit between cost and financial books is not requiredCorrect
  3. CNotional expenses such as imputed rent are recorded in the books
  4. DCost accounts are kept on memorandum basis only

Explanation

In integrated accounting, one set of books serves both cost and financial purposes, so there are no two profit figures to reconcile. A Cost Ledger Control Account is a feature of non-integrated (cost ledger) accounting, so option A is wrong. Notional items are not recorded in the financial books.

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