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CA Intermediate · Cost and Management Accounting · Cost Accounting Systems

In an integrated (integral) accounting system, which of the following is true about how cost and financial transactions are recorded?

In integrated accounting a single set of books serves both financial and cost purposes, so separate cost and financial ledgers and a reconciliation statement are not required. The option describing two ledgers reconciled later refers to non-integrated accounting, which is the opposite system.

  1. ASeparate cost ledgers and financial ledgers are maintained and later reconciled through a memorandum reconciliation statement
  2. BA single set of books is maintained, so no separate cost and financial ledgers need reconcilingCorrect
  3. COnly the cost ledger is maintained and financial books are prepared from it at year end
  4. DCost accounts are kept on a notional basis and are never tied to financial figures

Explanation

Integrated accounting uses one set of books that provides both financial and cost information. Hence there is no need for a separate reconciliation of two ledgers. The first option describes non-integrated (non-integral) accounting, where two sets of books are kept.

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