Acumulación de residuos y las 3R

re)uired.

7c8 There is an automatic chec> on the correctness of the cost data, which creates confidence in the management.

7d8 Centralisation of accounting function leads to economy.

7e8 #s Cost accounts are posted immediately from the original entries, there is no delay in obtaining cost data.

12. Notes on Reconciliation of Cost and /inancial

 Accounts:

Introduction to (econciliation of Cost and Financial Accounts6

Cost accounts are maintained independent of financial accounts. The two accounts have a different order of recording revenue and expenses. In cost accounting expanses are analysed and recorded in obective form while in financial accounting expenses are recorded in the boo>s of accounts in subective form.

 #s a result, there occurs a difference between profit shown by Cost

accounting and that of financial accounting. Therefore, it becomes imperative to reconcile two accounts which enables to test the reliability of cost accounts.

Need for (econciliation of

Need for (econciliation of Cost and Financial AccountsCost and Financial Accounts66

In a m

In a manufactuanufacturing concern both financial and ring concern both financial and cost accounting are maintained.cost accounting are maintained.

"aturally, two sets of accounts disclose profit which will not agree with each

"aturally, two sets of accounts disclose profit which will not agree with each

other. (

other. (rofit disclosed by rofit disclosed by the financial accounting does not agree with the financial accounting does not agree with thethe

profit disclosed by the cost accounting. ;ut this does not happen when a

profit disclosed by the cost accounting. ;ut this does not happen when a

manufacturing company uses an integrated accounting system i.e. no

manufacturing company uses an integrated accounting system i.e. no

separate cost and financial accounts are

separate cost and financial accounts are maintained.maintained.

So, when cost and

So, when cost and financial accounts are maintained separately andfinancial accounts are maintained separately and

independently of each other, profit disclosed by one system tends to differ

independently of each other, profit disclosed by one system tends to differ

from that of

from that of the other accounting systems. This difference in profit createsthe other accounting systems. This difference in profit creates

problems and the need of reconciling the accounting systems arises to arrive

problems and the need of reconciling the accounting systems arises to arrive

at one profit figure.

at one profit figure.

(easons for )isagreement $etween (econciliation of Cost

(easons for )isagreement $etween (econciliation of Cost and Financialand Financial

Accounts

Accounts66

)isagreement $etween Cost and Financial accounts generally arises due

)isagreement $etween Cost and Financial accounts generally arises due

to the following factors:

to the following factors:

i% Items that are included only in

i% Items that are included only in financial accounts:financial accounts:

1he following items of purely financial nature are included in financial

1he following items of purely financial nature are included in financial

accounts $ut not in cost

accounts $ut not in cost accounts:accounts:

7a8 Interest received on

7a8 Interest received on ban> depositsban> deposits

7b8 (rofit on sale of

7b8 (rofit on sale of assetsassets

7c8 &ents receivable

7c8 &ents receivable

7d8 Interest and dividend on

7e8 oss on sale of #ssets

7e8 oss on sale of #ssets

7f8 oss on sale

7f8 oss on sale of investmentof investment

7g8 Interest paid on ;an> oan, -ebentures

7g8 Interest paid on ;an> oan, -ebentures

7h8 -amages payable

7h8 -amages payable

7i8 (ayment of

7i8 (ayment of income@taxincome@tax

78 (ayment of dividend 78 (ayment of dividend 7>8 Transfer to &eserves 7>8 Transfer to &eserves 7l8 Creation of provisions 7l8 Creation of provisions 7m8 -onations 7m8 -onations

7n8 Ariting off fictitious #ssets li>e (reliminary expense, -iscount on issue

7n8 Ariting off fictitious #ssets li>e (reliminary expense, -iscount on issue ofof

shares, debentures

shares, debentures

7o8 Ariting of intangible fixed assets li>e oodwill, (atent &ights etc.

7o8 Ariting of intangible fixed assets li>e oodwill, (atent &ights etc.

ii% 4nder or

ii% 4nder or o+er8a$sorptioo+er8a$sorption of n of o+erhead e"penseso+erhead e"penses66

In cost accounts overheads are

In cost accounts overheads are absorbed at predetermined rates which areabsorbed at predetermined rates which are

based on past data. 0n the other hand, in financial accounts the actual

based on past data. 0n the other hand, in financial accounts the actual

amount of expense incurred is

amount of expense incurred is only considered. 9ence difference arises.only considered. 9ence difference arises.

iii% Adoption of different $ases for

iii% Adoption of different $ases for stock +aluationstock +aluation66

In financial accounts stoc>s are valued either at cost or

In financial accounts stoc>s are valued either at cost or at mar>et valueat mar>et value

whichever is less. ;ut in cost

production departments at cost

production departments at cost by using by using 4I40, I40, Simple #verage,4I40, I40, Simple #verage,

Aeighted #verage method. This leads to a difference.

Aeighted #verage method. This leads to a difference.

i+% #ases of )epreciation

i+% #ases of )epreciation66

1he methods of charging depreciation and the rates may $e

1he methods of charging depreciation and the rates may $e differentdifferent

which surely leads to

which surely leads to difference:difference: