CHAPTER
7
NON-INTEGRAL OR COST LEDGER ACCOUNTING SYSTEM
INTRODUCTION
Just as financial accounting system is maintained with certain objectives in view, cost accounting system is often distinctively maintained with a view to achieve its objectives. All transactions are collected from the same invoices, vouchers or receipts which are also common for financial accounts. Costs are then classified according to functions, departments or products. Though real accounts and nominal accounts are of direct relevance in ascertaining the cost of products, personal accounts and cash or bank account are not directly related to cost ascertainment. When cost accounting system is maintained it involves maintenance of certain books, for recording day-to-day transactions. It is not necessary to maintain cost accounting under double-entry system of book-keeping. However, in order to ensure arithmetical accuracy of data often the principles of double entry system of book-keeping is followed. Under double entry system cost accounts are maintained in the main ledger which is termed as cost ledger. In addition to this, many subsidiary ledgers are also maintained. In the cost ledger, control accounts are maintained pertaining to each subsidiary ledger. In addition to control accounts, two other accounts, viz, cost of sales account and costing profit and loss account are also maintained in the cost ledger, in order to match cost with revenue. Apart from these accounts, a general ledger adjustment account is opened in cost ledger to accommodate entries relating to transactions adjustable against cash, bank, debtors, creditors etc. Entries in the accounts are made once in each accounting period on the basis of periodical totals of transactions contained in subsidiary ledgers.
INTERLOCKING SYSTEM
There two systems of maintaining cost records, viz, interlocking system and integral accounting system. Under interlocking system, cost records are maintained in a separate set of books...