Scribd Logo
Upload

Welcome to Scribd!

  • Book 19 Mar 2024

    Uploaded by

    Tillu
    4 views9 pages

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    4 views9 pages

    Book 19 Mar 2024

    Uploaded by

    Tillu

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 9
    15 Integrated Accounting System Learning Objectives Will be able to : ystem of keeping accounts and its relative advantages and After studying this Chapter you understand the integrat, d limitations; ihe * explain the * Jeane pi "8 Procedure involved init; with those in aaa es involved in integrated system and compare these entries ‘al accounts and non-integrated system; 5.1 INTEGRATED OR INTEGRAL ACCOUNTING he term “Integral or Integrated Accounting” means integration or merger of financial and cost jssounts and maintenance ofa single set of accounts to record both financial and Cost transactions. bother words, it refers to the unified System of accounting which serves the Purpose of both ‘nancial and cost accounting, The accounts are maintained on double entry system. \ivantages: The integrated system of ‘accountin; ig offers the following advantages : |. No need for reconciliation : This system Tequires maintenance of a single set of accounts and discloses only one profit figure therefore there is no basis or need for reconciliation. . Simple and economical : This system is simple and economical. It avoids maintenance of different set of books and hence duplicate Tecording of transactions is avoided. i. Centralisation of accounting work : Maintenance of one set of accounts leads to centralisation of accounting work under one department. This leads to improved efficiency and better control in accounting function. ‘. Provides prompt cost information : As the system also requires maintenance of almost a Cost records kept under non-integrated system, therefore necessary cost information can also be promptly provided under this system. 152 Limitations . &ccounts and hence reduces Paper work, cost and time, 15.2 BooK., The following a 1, Fundamentals 0f Cot Aco : ng Suitabte for computer; ised accou iting : The ii is sation o inting : The integrated system of accounting is More. Suitable The system has the following limitations, basis. One syste: 8° rms: Large fins require cost and financial information on con Set of cm *™ Can not handle the arcounting work and fll benefits of keeping 58 "ints can not be realised under integrated system, Parte Compl e ‘Plex system : The integrated system sometimes becomes very complex an Meet i aan We dc the requirements oF providing timely and prompt cost information, pe KEEPING INVOLVED IN INTEGRATED ACCOUNTING counting procedure is adopted under integrated system of ‘accounting, Ledgers and Accounts to be Maintained : Following ledgers and accounts ae maintineg, + Ledgers and accounts °F financial accounting: @ General ledgers wherein the accounts of assets, capital, liabilities, ete. ate kept, Gi) Sales ledger or sundry debtors account (ii) Bought ledger or sundry creditors account Gi) Cash book to record all receipts and payment during the period, B. Ledgers and accounts of cost accounting @ Store ledger Gi) Work-in-progress ledger ii) Finished stock ledger (iv) Cost ledger not maintained : It is the Principal ledger of cost. accounting under non- integrated system, It contains all the nominal accounts, In addition it also contains a Control account for each subsidiary ledgeriie., stores ledger, WIP ledger and finished goods ledger. This account is not maintained under integrated; accounting system, Control Accounts are Maintained in General Ledger : The following control accounts which appeared in cost: ledger under non-integrated ‘System are maintained in financial general ledger under integrated system: @ Stores ledger control account i) Wages control account (ii) Factory overhead control account (iv) Work-in-progress ledger control account (v) Administration overhead control account (vi) Finished goods ledger control account (vii) Selling and distribution overhead control account (viii) Cost of sales control account ap dco System 153 ledger control account ) sales I se ledger control account. ° pc eral ledger adjustment account is not maintained ; This account was kept under onintegrated system for completing the double entry aspect of the transaction, Since personal spdreal accounts are kept under integrated system hence general ledger adjustment account isnot required . Costing profit and loss account is not maintained : This is because only one profit figure willbe disclosed. «_ Balance in respective overhead accounts representing over and under absorption is transferred * tq profit and loss account and is not carried forward to next year. ;, Asuitable coding system may be developed to record both cost and financial transactions © gystematically. 3 ACCOUNTING ENTRIES umparative summary of the accounting entries under financial accounting, cost accounting and pgreted accounting system are given below for better understanding and comparison. Comparison of Accounting Entries qsaction _ |Financial Non-integrated Integrated Accounting Accounting + ATERIALS Purchase of materials |Purchases A/c Dr. | SLC A/c Dr. |SLC A/c Dr. for stock To Cash/Bank A/c] To GLA A/c To Cash Bank A/c To S.Creditors A/c To S.Creditors A/c ials retumed to |S.Creditors A/c Dr. | GLAA/c Dr. |S.Creditors A/e Dr. ae To Purchase To SLC Ale To SLC A/c he, returns A/c jals purchased Purchases Dr. |WIPLCA/c Dr. ||WIPLC Alc Dr. ferapecifejobs | TecsshAleor | ToGLAALe To Cash Ale or y To S.Creditors A/c To S.Creditors A/c creditors |S.Creditors Ale Dr. | Nocntry SCreditors Ale Dr. rn To Cash/Bank Ale To Cash/Bank Alo No entry WIPLC A/c Dr. |WIPLC Ale Dr. To SLC A/c To SLC Alc No entry SLC Ale Dr. |SLC A/c Dr To WIP LC A/c To WIP LC A/c | ROC Ale Dr. [ROC No entry r. Alc Dr, Niel? ToSLC Ale To SLC Ale a Fundamentals. of Cost Accouning 154 8. Issue of Materials for [No entry Capital order 9. Retum of indirect INo entry materials 10. Transfer of materials No entry from one job to another 11. Loss of material Labour 13. Wages paid Wages A/c Dr. To Cash/Bank A/c 14.Allocation of direct [No entry wages 15.Allocation of indirect |No entry wages Direct Expenses 16.Direct expenses Expenses A/c Dr. incurred To Cash/Crs. A/c Overheads 17 Indirect expenses Expenses A/c Dr. incurred/paid To Cash/Cr. A/c 18. Absorption of No entry production overhead 19.Absorption of No entry administration overhead| telating to factory 20. Absorption of General |No entry Admn. overhead 21 Absorption of: selling |No entry and dist. overhead 22.Over-absorptionof No entry overhead Copital WIP Ale Dr. |Capital WIP Ale, To SLC A/c To SLC Ale ‘ SLC Ale Dr. |SLC Ale Dr To ROC Alc To ROC Ale ; No entry in control A/c. |No entry in contro} Alc, In WIP ledger: In WIP ledger. Transferee WIP A/c Dr.| Transferee WIP Al Dr, To Transferor WIP A/c |To Transferor WIP. Ale +IfNormal: FOC Ale Dr. |FOC Ale To SLC Ale To SLC Ale Tf Abnormal : Costing P & L Ale Dr. |CostingP&LAe pp To SLC A/c To SLC Alc WC Alc Dr. |WC Ale Dr To GLAA/c To Cash/Bank A/c WIPLC A/c Dr. |WIPLC Ale Dr To WC Alc To WC Alc ROC Alc Dr. |ROC Alc Dr. To WC Alc To WC Alc WIPLCA/c Dr. - |WIPLC Ale Dr. To GLA A/c To Cash/Cr Ale * ROC Alc Dr. |ROC Ale Dr. To GLA A/c To Cash/Cr. Ale WIPLC A/c Dr. |WIPLC Ale Dr. To FOC Alc To FOC Alc FGLC A/c Dr. |FGLC A/c Dr. To AOC Alc To AOC Alc Cost of Sales A/eDr, |FGLC Ale Dr. To AOC A/c To AOC Alc Cost of Sales A/eDr. |FGLC A/c Dr. To SDOC A/c To SDOC Ale ROC Ale Dr. JROC Ale Dr. To OA Alc or To OA Alc or Costing P&L A/c | Costing P&LAle A > | ted Accounting System wes ; 155 OA Ale or Dr. [OA Ack or Dr. Costing P &LA/cDr. | Costing P& LA/c Dr. 23,Under-absorption of |No entry overhead To ROC Alc To ROC A/c other Transactions 4Finished goods {No entry FGLCA’ Dr. |FGLCA’e Dr. produced ToWPLCAl | To WIPLCA/c ‘s5.Cost of goods sold | No entry (a) COSA/e Dr. |COS Ale Dr. To FGLCA/c ToFGLCA/c Dr. 16.Sales Cash or debtors Dr. | GLA A/c Dr. | Cash/debtors Dr. To Sales To Costing P&L A/c] To Sales Alc yy.Transfer of Sales —_ | No entry Sales A/c Dr. To P& LA/c Abbreviations Used : |. Store Ledger Control A/c = SLC Alc 2, Wages Control A/c — wWCAl 3, Factory Overhead A/c — FO ie i 1 Workein-progress Ledger Control Ale es es s. Adam, Ovethend Conse’ mae rcroNs 6. Finished Goods Ledger ComtolAle a pence 1, Selling andDistn, Overhead Con’r’™* = OA Ale (08 Al) 8. Overhead ‘Adjustment/Suspence ‘/° Ba cosiAe GLAA/c 9, Cost of Sales A/e : justment A/c - Ledger Adi — ROCA NS Fundamentals of ¢ O8t Acco, Unting Graded Illustrations/Examination Question, 15.6 SS ee Mlustration 1. Journalise the following transactions in the Cost Journal assuming that integrated accounting is maintained: System of z (i) | Credit purchases 50,000 (ii) | Cash purchases 20,000 (iii) | Credit purchases for special job 10,000 (iv) | Returns to suppliers (credit purchases) 5,000 (v) | Issue of direct material to production 40,000 (vi) | Issue of indirect material to production 10,000 (vii) | Direct materials returned from production to stores 5,000 (viii) | Indirect materials returned from production to stores 2,000 (ix) | Normal wastage of material 1,000 (x) | Material destroyed by fire 5,000 (xi) | Wages paid 40,000 Direct wages allocated 25,000 Indirect wages allocated 10,000 (xiv) | Normal idle time of labour 2,000 (xv) | Abnormal idle time of labour 3,000 (xvi) | Direct expenses 10,000 (xvii) | Factory overhead incurred in cash 8,000 | Absorbed 228,500 (xviii) | Administration overhead (Factory) incurred in cash 7,000 | Absorbed 27,100 (xix) | General Administration overhead (Factory) incurred in cash 8,000 | Absorbed 7,500 (

    You might also like