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CA Intermediate · Cost and Management Accounting · Cost Accounting Systems

Which statement about the Cost Ledger Control Account (also called General Ledger Adjustment Account) in a non-integrated system is correct?

The Cost Ledger Control Account sits in the cost ledger of a non-integrated system and completes double entry by representing the financial books' side of each cost transaction. It is not used in integrated accounting and is not closed to profit and loss.

  1. AIt is kept in the cost ledger to complete double entry and represents the financial books' side of cost transactionsCorrect
  2. BIt is kept in the financial ledger to record cost of goods sold
  3. CIt is used only in integrated accounting
  4. DIt is a nominal account closed to the profit and loss account

Explanation

In the cost ledger the Cost Ledger Control Account completes the double entry for items whose other side lies in the financial books. It is not used in integrated systems and is not a nominal account closed to profit and loss; it is a control account in the cost ledger.

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