Systems of Cost Accounting Integral or Integrated accounting system Financial amp cost accounts are merged amp single set of books are maintained Nonintegral or Non integrated independent accounting system ID: 1027140
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1. INTEGRAL AND NON INTEGRAL SYSTEMS
2. Systems of Cost Accounting Integral or Integrated accounting system: Financial & cost accounts are merged & single set of books are maintainedNon-integral or Non integrated (independent) accounting system: two separate sets of accounts are maintained
3. Non-integrated Accounting System It is an accounting system where separate account books are maintained to record financial and cost transactions with the help of ledgers and cost control accounts.
4. Non- integrated accountsTypes of accounts maintained in cost accountsPERSONAL A/Cs (not maintained)NON-EPRSONAL A/CIMPERSONAL A/CsSREAL A/Cs ( only accounts relating to stocks, WIP, & FG are maintained NOMINAL A/CS ( both costs & revenue are recorded)
5. Ledgers under non-integrated systemCost ledger; Stores Ledger;WIP ledger;Finished Goods Ledger
6. Control accounts Stores ledger control account. Work-in-progress ledger control account. Finished good ledger control account. General ledger control account. Wages control account. Factory overhead control account. Administrative overhead control account. Selling and distribution overhead control account. Cost of sales account. Overhead adjustment account. Costing profit and loss account.
7. Characteristics of the non-integrated accounting systemSeparate account books are maintained to record financial and cost transactions. Financial and cost accountant both are responsible to record transactions in the book separately. The double entry system is adapted for recording the transactions in both accounts books. Personal and real accounts are not opened in cost account books. General and cost ledger adjustment account is opened in cost books to complete the double entry system. Reconciliation statement is prepared to reconcile profits as revealed by cost account books and financial account books
8. Integrated accounting system Integrated accounting system is a method of accounting in which financial and cost accounts are recorded in the same books based on the double entry system.
9. Main advantages of the integrated accounting systemSimple & economical;No need for reconciliation; Centralization of accounting work; Better coordination;Provides prompt cost information;Suitable for computerized accounting;
10. Limitations of the integrated accounting systemThe accounting system is sophisticated and requires efficient and trained staff. Not suitable if cost and financial data are required to be separately presented. This accounting system is complicated and costly.