Cost Accounting- T.Y. B.

Com-Semester VI
Ms. Pooja Savla
SIES College of Commerce and Economics

Chp 1- Cost Control Accounts

Cost Accounting System

Non- Integrated AS Integrated AS

Non-integral accounting system where separate accounts/ books are maintained to record financial
and cost transactions: Non-integral accounting system is also known as ‘Cost Control Accounts’. Two
set of accounts/ books are kept in non-integral system one for recording cost transaction another for
financial transaction.

Double entry system is adopted for recording the transactions in both accounts books.

Integral system is a system of accounting under which only one set of books of account is
maintained to record both the transactions (cost & financial). It is also known as integrated
accounting system. There is no need for cost ledger and cost ledger control account.

Integrated accounts are like a hybrid between non-integrated and the financial system of
accounting.

In case of the non-integrated system, no personal or real account is prepared and all entries are
passed through the General Ledger Adjustment account.

The entries to be passed for various transactions under non-integral system are summarized below:

Journal entries under non-integral system:

1 Material purchased:
a) For Stock-
Stores ledger Control A/c. Dr.

To General ledger adjustment A/c

b) For Specific Job-

Work-in-progress A/c. Dr.

To General ledger adjustment A/c.

2. Material issued:

a) Direct Material-

Work in progress A/c. Dr.

To Stores Ledger Control A/c.

b) Indirect Material-
Factory overhead A/c. Dr.

To Stores Ledger Control A/c.

3. Material returned from shop floors/ Jobs:

Stores Ledger Control A/c. Dr.

To Work-in-progress A/c.

4. Material returned to supplier:

General ledger adjustment A/c. Dr.

To Stores Ledger Control A/c.

5. Material transferred from one Job to another job:

Transfer Job A/c. Dr.

To transfer job A/c.

6. Salary and wages paid:

Wages Ledger Control A/c. Dr

To General ledger adjustment A/c

7. Distribution of wages (absorption entries):

a) Direct wages-

Work in progress A/c Dr

To Wages Ledger Control A/c

 b) Indirect wages-
Factory Overhead Ledger Control A/c Dr
To Wages Ledger Control A/c

c) Factory wages-

Factory Overhead Ledger Control A/c Dr

To Wages Ledger Control A/c

d) Office wages-

Office Overhead Ledger Control A/c Dr

To Wages Ledger Control A/c

e) S & D wages-

S & D Overhead Ledger Control A/c Dr

To Wages Ledger Control A/c

8. Direct Expenses incurred:

Work-in-progress A/c. Dr

To General ledger adjustment A/c

9. Factory Overhead incurred:

Factory overhead Ledger Control A/c. Dr 10,000

To General ledger adjustment A/c

10. Factory Overhead recovered / absorbed:

Work-in-progress A/c. Dr

To Factory Overhead Ledger Control A/c. 12000

11. Under absorbed overheads:

Costing P & L A/c Dr

To respective overhead A/c (Factory/Admin/S&D)

12. Over absorbed overheads:

Respective overhead A/c (Factory/Admin/S&D) Dr

To Costing P & L A/c

13. Cost of FG/ FG produced/ Jobs completed:

FG Control A/c Dr

To WIP Control A/c

14. Office Overhead incurred:

Office Overhead Ledger Control A/c. Dr

To General ledger adjustment A/c

15. Office Overhead recovered / absorbed:

Finished goods Ledger Control A/c. Dr

To Office Overhead Ledger Control A/c.

16. FG sold at Cost (Cost of Sales):

Cost of Sales A/c Dr

To FG Ledger Control A/c

17. Selling Overhead incurred:

Selling overhead Ledger Control A/c. Dr

To General ledger adjustment A/c

18. Selling Overhead recovered / absorbed:

Cost of Sales A/c. Dr

To Selling overhead Ledger Control A/c.

19. Cost of sales transferred to Costing P & L A/c:

Costing P & L A/c Dr.

To Cost of Sales A/c

20. For Sales:

General ledger adjustment A/c. Dr

To Sales A/c.

21. Sales returned:

Sales A/c. Dr

To General ledger adjustment A/c.

22. Goods sold returned (At cost):

Finished goods Ledger Control A/c Dr

To Cost of Sales A/c.

23. Sales transferred to Costing P & L A/c:

Sales A/c Dr.

To Costing P & L A/c

24. Costing P & L A/c transferred to General Ledger Adjustment A/c:

a) If Profit-
Costing P & L A/c Dr
To General Ledger Adjustment A/c

b) If Loss:
General Ledger Adjustment A/c Dr
To Costing P & L A/c
Note:

Sales A/c Costing P & L A/c

General Ledger
Adjustment A/c

RM ------ WIP ------- FG

Questions:

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HW Sums

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Revision sum: