Non Integral System Accounting

When we use both financial accounting and cost accounting for recording transactions separately, at that time , it is called non integral system of accounting. Non integral system of accounting is just opposite the integral system of accounting. In non-integral system of accounting, we need to make reconciliation statement for knowing the reasons of difference in the profit which have been calculated in cost accounting system and financial accounting system.

In non-integral system of accounting, we keep the cost ledgers :

1. General Ledger Adjustment Account

This account is opening just for self-balancing. This account represents the personal accounts in cost accounting's non integral system.

Credit side

balance b/d - opening balance

Store ledger control account - purchase

work in process control account - special purchase

Wages control account - total wages ( Direct +  indirect + administrative + selling department salaries)

Production overhead control account - Production expenses

administrative overhead control account - administrative expenses

Selling and distribution overhead control account - selling and distribution expenses

Costing profit and loss account - transfer from costing and profit and loss account


Store ledger control account - Return to suppliers

Sales account - total sales

Balance c/d - balancing figure

2. Stores Ledger Control Account

Opening stock in store balance will be debited in this account. New buying of material will be debited with the name of general ledger adjustment account in stores ledger control account. Material issued for production will be credited with the name of work in process control account. Return to supplier will be credited with the name of general ledger adjustment account in this account. Difference of debit side and credit side will be the closing stock in store.

3. Wages Control Account 

This account is debited with total wage payment ( Direct +  indirect + administrative + selling department salaries). We total all these account and general ledger adjustment account will be debited in this account. After this, we will credit the direct wage with work in process account. We will credit indirect wage with production overhead control account. We will credit salaries of administration department with administrative overhead control account. In end, we will credit salaries of selling department with selling and distribution overhead control account.

4. Production  Overhead Control Account 

Production overhead will show all production overheads in its debit side.

Debit Side 

Indirect material used - Store ledger control account

Indirect wage - Wages control account

Indirect Expenses - General Ledger Adjustment Account

Credit Side 

Production overhead absorbed by production - Work in process control account

Difference of credit side and debit side will go to costing profit and loss account

5. Work in process Ledger Control Account


Balance b/d Opening balance of work in process

Production overhead control account - production overheads absorbed by production

Wages Control Account - Direct Wages

Store Ledger Control Account - Indirect material used for production


Finished goods ledger control account - Producing of finished goods during the year.

Balance C/d - Closing stock which in production process

6. Administrative Overhead Ledger Control Account 


General Ledger Adjustment Account - Administrative Expenses

Salaries for Administrative department


Finished Goods Ledger Control Account - Absorption of administrative overhead by finished goods

balance - Costing profit and loss account

7. Finished Goods Ledger Control Account


Balance b/d - opening balance of finished goods

work in process control account  - production during the year

administrative overhead control account - Absorption of administrative overhead by finished goods


Cost of Sale Account - Finished Goods sold at cost

Balance C/d -Closing stock of finished goods

8. Selling and Distribution Overhead Control Account 

This account is debited with general ledger adjustment account and wages control account (payment for sales to employees)  and credited with cost of sales. Difference between debit and credit side will transfer to costing profit and loss account.

9. Cost of Sale Account

This account is debited with finished goods ledger control account and selling and distribution overhead control account and this account is transferred to sales account.

10 Sales Account

In the debit side, we will show cost of sale account and costing profit and loss account and it will be transfer to general ledger adjustment account.

11. Costing Profit and Loss Account 

This account shows the net profit as per the cost accounting rules. In the credit side, we show, sales account and production overhead control account In the debit side, we show administrative overhead control account, selling and distribution overhead control account and difference of credit and debit side will be net profit which will be transfer to general ledger adjustment account's credit side. 






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Accounting Education: Non Integral System Accounting
Non Integral System Accounting
Accounting Education
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