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
Credit
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
Debit
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
Credit
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
Debit
General Ledger Adjustment Account - Administrative Expenses
Salaries for Administrative department
Credit
Finished Goods Ledger Control Account - Absorption of administrative overhead by finished goods
balance - Costing profit and loss account
7. Finished Goods Ledger Control Account
Debit
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
Credit
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.
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
Credit
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
Debit
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
Credit
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
Debit
General Ledger Adjustment Account - Administrative Expenses
Salaries for Administrative department
Credit
Finished Goods Ledger Control Account - Absorption of administrative overhead by finished goods
balance - Costing profit and loss account
7. Finished Goods Ledger Control Account
Debit
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
Credit
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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