Skip to content

CMA Intermediate · Cost Accounting · Reconciliation of Costing and Financial Profit

Which of the following is a benefit of reconciling cost and financial accounts?

Reconciliation identifies and explains why cost and financial profits differ, which verifies the accuracy of both sets of accounts and builds confidence in cost data. It does not replace financial accounts or force profits to be equal, and it applies where both are kept.

  1. AIt eliminates the need to maintain financial accounts
  2. BIt shows the reasons for differences in profit and checks the reliability of both sets of recordsCorrect
  3. CIt ensures both profits are always equal by changing the cost records
  4. DIt is required only when no cost records are kept

Explanation

Reconciliation explains differences and helps detect errors, improves confidence in cost data and aids control. It does not remove either set of books and does not force profits to be equal. It is relevant precisely when both sets are maintained separately.

Did you get it right without looking?

One question tells you little. A timed set on Reconciliation of Costing and Financial Profit shows your real accuracy, how long you take and where you lose marks.

Practise Reconciliation of Costing and Financial ProfitFree diagnostic mock

More Reconciliation of Costing and Financial Profit questions