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CA Intermediate · Cost and Management Accounting · Cost Accounting Systems

Under the non-integrated system, which entry is passed when raw materials worth ₹80,000 are purchased on credit and recorded in the cost ledger?

In a non-integrated system the cost ledger has no creditors account, so the purchase is entered by debiting Stores Ledger Control Account and crediting Cost Ledger Control Account for ₹80,000. The latter represents the financial accounts.

  1. AStores Ledger Control A/c Dr. ₹80,000 to Cost Ledger Control A/cCorrect
  2. BStores Ledger Control A/c Dr. ₹80,000 to Creditors A/c
  3. CCost Ledger Control A/c Dr. ₹80,000 to Stores Ledger Control A/c
  4. DWork-in-Process Control A/c Dr. ₹80,000 to Cost Ledger Control A/c

Explanation

Cost books have no personal accounts such as creditors. The purchase is recorded by debiting Stores Ledger Control A/c and crediting Cost Ledger Control A/c, which represents the financial books. Option B uses a personal account, which is not kept in the cost ledger.

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