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CMA Intermediate · Cost Accounting · Cost Book-Keeping

Under a non-integral system, Sharma Tools Ltd maintains a Cost Ledger Control Account. When raw materials worth Rs 2,40,000 are purchased and received in stores, which entry appears in the cost books?

In the non-integral system the cost ledger has no creditors account, so purchases of materials are recorded by debiting Stores Ledger Control Account and crediting Cost Ledger Control Account. The control account stands in for the financial books, so the entry is Stores Ledger Control Dr and Cost Ledger Control Cr.

  1. AStores Ledger Control A/c Dr 2,40,000 to Cost Ledger Control A/c 2,40,000Correct
  2. BCost Ledger Control A/c Dr 2,40,000 to Stores Ledger Control A/c 2,40,000
  3. CCreditors A/c Dr 2,40,000 to Stores Ledger Control A/c 2,40,000
  4. DWork-in-Progress Control A/c Dr 2,40,000 to Cost Ledger Control A/c 2,40,000

Explanation

The cost ledger holds no personal accounts such as creditors. Purchases are recorded by debiting Stores Ledger Control and crediting Cost Ledger Control, which is the contra account representing the financial books. Option B reverses the debit and credit. Option C uses a personal account that is not kept in the cost ledger.

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