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CA Intermediate · Cost and Management Accounting · Cost Accounting Systems

Under non-integrated accounting, in a company's cost ledger, which account is the 'Cost Ledger Control Account' (General Ledger Adjustment Account) designed to do?

The Cost Ledger Control Account makes the cost ledger self-balancing. It carries the corresponding entries that would otherwise appear in the financial books, such as payments to creditors and wages paid, so the cost ledger can be balanced without referring to the financial ledger.

  1. ARecord only the sales and debtors of the business
  2. BMake the cost ledger self-balancing by holding the balancing figures of the entries that would otherwise be in the financial booksCorrect
  3. CReplace the financial ledger completely
  4. DRecord only fixed asset transactions

Explanation

In a cost ledger kept apart from financial books, the control account carries the other side of every cost entry so that the cost ledger balances on its own. It does not replace the financial ledger, which still exists separately.

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