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CA Intermediate · Cost and Management Accounting · Cost Accounting Systems

Under a non-integrated (separate ledgers) system of cost and financial accounting, which of the following is the account that is maintained in the cost ledger to record the balancing figure arising from transactions with the financial books?

The Cost Ledger Control Account, also called the General Ledger Adjustment Account, is used. It makes the cost ledger self-balancing by recording the opposite entry of each cost transaction, linking cost records with financial books, whereas stores and WIP control accounts only track specific asset-type balances.

  1. ACost Ledger Control AccountCorrect
  2. BProfit and Loss Adjustment Account
  3. CStores Ledger Control Account
  4. DWork-in-Progress Control Account

Explanation

In a non-integrated system, the cost ledger is a self-balancing ledger. The Cost Ledger Control Account (General Ledger Adjustment Account) records the dual aspect of every transaction, so that the cost ledger balances independently. The other accounts are ordinary control accounts for stores and WIP, not the balancing account.

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