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CA Intermediate · Cost and Management Accounting · Cost Accounting Systems

In an integrated (integral) accounting system, which of the following statements is correct?

In integrated accounting, cost and financial transactions are recorded in one set of books. Since there is just one profit figure produced from a common record, a separate reconciliation between cost profit and financial profit is not required, unlike the non-integrated system with two ledgers.

  1. ACost and financial accounts are kept in two separate ledgers and reconciled at year-end
  2. BCost and financial accounts are kept in one set of books, so no separate reconciliation of profits is neededCorrect
  3. COnly the cost ledger is maintained and financial accounts are prepared from memorandum records
  4. DOnly prime cost items are recorded, overheads being left out of the books

Explanation

Integrated accounting merges cost and financial records into a single set of books using a common source document for both. Because there is only one profit figure, no reconciliation statement is required. Option A describes non-integrated accounting, which needs reconciliation.

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