{"id":3369,"date":"2020-02-17T06:33:26","date_gmt":"2020-02-17T06:33:26","guid":{"rendered":"https:\/\/commerceiets.com\/?p=3369"},"modified":"2023-06-09T18:07:52","modified_gmt":"2023-06-09T18:07:52","slug":"reconciliation-of-cost-and-financial-accounts","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/reconciliation-of-cost-and-financial-accounts\/","title":{"rendered":"RECONCILIATION OF ACCOUNTS"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/reconciliation-of-cost-and-financial-accounts\/#RECONCILIATION_OF_COST_AND_FINANCIAL_ACCOUNTS\" title=\"RECONCILIATION OF COST AND FINANCIAL ACCOUNTS\">RECONCILIATION OF COST AND FINANCIAL ACCOUNTS<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/reconciliation-of-cost-and-financial-accounts\/#Reconciliation_of_Cost_and_Financial_Accounts_When_cost_accounts_and_financial_accounts_are_separately_maintained_in_two_different_sets_of_books_two_profit_and_loss_accounts_will_be_prepared%E2%80%94one_for_costing_books_and_second_for_financial_books\" title=\"Reconciliation of Cost and Financial Accounts: When cost accounts and financial accounts are separately maintained in two different sets of books, two profit and loss accounts will be prepared\u2014one for costing books and second for financial books. \">Reconciliation of Cost and Financial Accounts: When cost accounts and financial accounts are separately maintained in two different sets of books, two profit and loss accounts will be prepared\u2014one for costing books and second for financial books. <\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/reconciliation-of-cost-and-financial-accounts\/#NEED_FOR_RECONCILIATION_OF_ACCOUNTS\" title=\"NEED FOR RECONCILIATION OF ACCOUNTS\">NEED FOR RECONCILIATION OF ACCOUNTS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/reconciliation-of-cost-and-financial-accounts\/#REASONS_FOR_DISAGREEMENT_IN_THE_PROFITS_SHOWN_BY_COST_AND_FINANCIAL_ACCOUNTS\" title=\"REASONS FOR DISAGREEMENT IN THE PROFITS SHOWN BY COST AND FINANCIAL\nACCOUNTS\">REASONS FOR DISAGREEMENT IN THE PROFITS SHOWN BY COST AND FINANCIAL\nACCOUNTS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/reconciliation-of-cost-and-financial-accounts\/#ADVANTAGES_OF_RECONCILIATION\" title=\"ADVANTAGES OF RECONCILIATION\">ADVANTAGES OF RECONCILIATION<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/commerceiets.com\/reconciliation-of-cost-and-financial-accounts\/#METHODS_OR_PROCEDURE_OF_RECONCILIATION\" title=\"METHODS OR PROCEDURE OF RECONCILIATION\">METHODS OR PROCEDURE OF RECONCILIATION<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1 class=\"wp-block-heading has-text-align-center\" id=\"reconciliation-of-cost-and-financial-accounts\"><span class=\"ez-toc-section\" id=\"RECONCILIATION_OF_COST_AND_FINANCIAL_ACCOUNTS\"><\/span><strong>RECONCILIATION OF COST AND FINANCIAL ACCOUNTS<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h1>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"reconciliation-of-cost-and-financial-accounts-when-cost-accounts-and-financial-accounts-are-separately-maintained-in-two-different-sets-of-books-two-profit-and-loss-accounts-will-be-prepared-one-for-costing-books-and-second-for-financial-books\"><span class=\"ez-toc-section\" id=\"Reconciliation_of_Cost_and_Financial_Accounts_When_cost_accounts_and_financial_accounts_are_separately_maintained_in_two_different_sets_of_books_two_profit_and_loss_accounts_will_be_prepared%E2%80%94one_for_costing_books_and_second_for_financial_books\"><\/span>Reconciliation of Cost and Financial Accounts: When <a aria-label=\"cost accounts and financial accounts (opens in a new tab)\" href=\"https:\/\/commerceiets.com\/difference-between-cost-accounting-and-financial-accounting\/\" target=\"_blank\" rel=\"noreferrer noopener\">cost accounts and financial accounts<\/a> are separately maintained in two different sets of books, two profit and loss accounts will be prepared\u2014one for costing books and second for financial books. <span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>The profit or losses shown by the cost accounts may not agree with the profit or loss shown by financial accounts or books. Therefore, it becomes necessary that profit or loss shown by the two sets of accounts is reconciled. The whole process of reconciling the profits or losses shown differently in the cost and financial accounts is known as Reconciliation of cost and financial Accounts. <\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"168\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/02\/download-41.png\" alt=\"RECONCILIATION OF COST AND FINANCIAL ACCOUNTS\" class=\"wp-image-5076\"\/><figcaption class=\"wp-element-caption\">RECONCILIATION OF COST AND FINANCIAL ACCOUNTS<\/figcaption><\/figure>\n\n\n\n<p><strong>ACCORDING TO WHELDON<\/strong><\/p>\n\n\n\n<p>\u201cNo system is complete unless it is linked up with the\nfinancial accounting, that results shown by both cost and financial accounting\nmay be reconciled.\u201d<\/p>\n\n\n\n<p><strong>ACCORDING TO ERIC L\nKOHLER<\/strong><\/p>\n\n\n\n<p>\u201cReconciliation is the determination of the items necessary\nto bring the balances of two or more related accounts or statements, into\nagreement.\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center\" id=\"need-for-reconciliation-of-accounts\"><span class=\"ez-toc-section\" id=\"NEED_FOR_RECONCILIATION_OF_ACCOUNTS\"><\/span><strong>NEED FOR RECONCILIATION OF ACCOUNTS<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Reconciliation between the results of the two sets of books\nis necessary due to the following reasons: <\/p>\n\n\n\n<ul>\n<li>It finds out the reasons for the difference in\nthe profit or loss in cost and financial accounts.<\/li>\n\n\n\n<li>It ensures the mathematical accuracy and\nreliability of cost accounts in order to have cost ascertainment, cost control\nand to have a check on the financial accounts. <\/li>\n\n\n\n<li>It contributes to the standardization of\npolicies regarding stock valuation, depreciation and overheads. <\/li>\n\n\n\n<li>It facilitates more coordination and promotes\nbetter co-operation, between the activities of financial and cost sections of\nthe accounting department. <\/li>\n\n\n\n<li>Reconciliation places management in better position\nto acquaint itself with the reasons for the variation in profits paying the way\nfor more effective internal control.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center\" id=\"reasons-for-disagreement-in-the-profits-shown-by-cost-and-financial-accounts\"><span class=\"ez-toc-section\" id=\"REASONS_FOR_DISAGREEMENT_IN_THE_PROFITS_SHOWN_BY_COST_AND_FINANCIAL_ACCOUNTS\"><\/span><strong>REASONS FOR DISAGREEMENT IN THE PROFITS SHOWN BY COST AND FINANCIAL\nACCOUNTS<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Difference in profit or loss between cost and financial accounts may arise due to the following reasons:<\/p>\n\n\n\n<p><strong>ITEMS OF INCOMES SHOWN ONLY IN FINANCIAL ACCOUNTS<\/strong> <\/p>\n\n\n\n<p>There are a number of items which are included in financial\naccounts but find no place in cost accounts. While reconciling any items under\nthis category must be considered. Such items are classified into three\ncategories as under:<\/p>\n\n\n\n<p><strong>(i) Purely Financial\nCharges:<\/strong> Under this category, the following charges or examples are considered:<\/p>\n\n\n\n<ul>\n<li>Loss on investments<\/li>\n\n\n\n<li>Discount on debentures and bonds<\/li>\n\n\n\n<li>Loss on the sale of capital assets<\/li>\n\n\n\n<li>Expenses of the company\u2019s share transfer office<\/li>\n\n\n\n<li>Interest on bank loan and mortgages<\/li>\n\n\n\n<li>Capital expenditure<\/li>\n\n\n\n<li>Commission to partners and managing agents<\/li>\n\n\n\n<li>Damages payable at low<\/li>\n\n\n\n<li>Fines and penalties<\/li>\n\n\n\n<li>Goodwill written off, preliminary expenses<\/li>\n\n\n\n<li>Loss due to theft, fire, accident etc.<\/li>\n\n\n\n<li>Debit balance of profit and loss account written\noff<\/li>\n\n\n\n<li>Excess provision for depreciation<\/li>\n\n\n\n<li>Commission on issue of shares and debentures<\/li>\n\n\n\n<li>Cash discount allowed.<\/li>\n<\/ul>\n\n\n\n<p><strong>(ii) Purely Financial\nIncomes:<\/strong> Under this category, the following items of income are included:<\/p>\n\n\n\n<ul>\n<li>Rent receivable<\/li>\n\n\n\n<li>Transfer fees received<\/li>\n\n\n\n<li>Dividend and interest received on investments<\/li>\n\n\n\n<li>Profits on the sale of fixed assets<\/li>\n\n\n\n<li>Interest received on bank deposits<\/li>\n\n\n\n<li>Income tax refund<\/li>\n\n\n\n<li>Commission received<\/li>\n\n\n\n<li>Cash discount received<\/li>\n\n\n\n<li>Brokerage received<\/li>\n\n\n\n<li>Damages received.<\/li>\n<\/ul>\n\n\n\n<p><strong>(iii) Appropriations\nof Profit:<\/strong> Under this category, the following items are included:<\/p>\n\n\n\n<ul>\n<li>Donations and charities<\/li>\n\n\n\n<li>Income tax<\/li>\n\n\n\n<li>Dividend paid<\/li>\n\n\n\n<li>Transfers to reserves and sinking funds<\/li>\n\n\n\n<li>Any other items which appear in profit and loss appropriation account.<\/li>\n<\/ul>\n\n\n\n<p><strong>ITEMS SHOWN ONLY IN COST ACCOUNTS<\/strong><\/p>\n\n\n\n<p>There are certain items which are included in cost accounts but not in financial accounts.<\/p>\n\n\n\n<p><strong>Examples:<\/strong><\/p>\n\n\n\n<ul>\n<li>Nation depreciation on assets fully depreciated in the books<\/li>\n\n\n\n<li>National rent of the owned building and no rent is payable<\/li>\n\n\n\n<li>Interest on capital employed but not actually paid<\/li>\n\n\n\n<li>National salaries<\/li>\n<\/ul>\n\n\n\n<p><strong>OVER AND UNDER ABSORPTION OF OVERHEADS<\/strong><\/p>\n\n\n\n<p>Overheads absorbed in cost accounts on the basis of estimation like percentage on direct materials, percentage on direct wages, etc. may be more or less than the actual amount incurred. If overheads are not fully absorbed, i.e. the amount in cost accounts is less than the actual amount, the shortfall is called under-absorption. On the other hand, if overhead expenses in cost accounts are more than the actual, it is called over-absorption. Thus, under or over-absorption of overheads leads to difference in two accounts. Sometimes, selling and distribution expenses are ignored in cost accounts and as such costing profit will be higher and thus requires reconciliation.<\/p>\n\n\n\n<p><strong>DIFFERENT BASES OF STOCK VALUATION<\/strong><\/p>\n\n\n\n<p>In cost accounting, stock are valued according to the method\nadopted in stores accounts i.e., FIFO, LIFO, etc. On the other hand, valuation\nof stock in financial accounts is invariably based on the cost or market price,\nwhichever is less. Different stock values result in some difference in profit\nor loss shown by the two sets of account books.<\/p>\n\n\n\n<ul>\n<li><strong>Raw\nMaterial:<\/strong> In financial accounts, stock of raw material is valued at cost or\nmarket price whichever is less, while in cost accounts stock can be valued on\nthe basis of FIFO or LIFO or any other method. Thus the value of stock may be\ndifferent in both the books. <\/li>\n\n\n\n<li><strong>Work-in-progress:<\/strong>\nDifference may also exist regarding the mode of valuation of work-in-progress. It\nmay be valued at prime cost or factory cost or cost of production. The most\nappropriate mode of valuing is at factory cost in cost accounts. In financial\naccounts, work-in-progress may be valued after considering a part of\nadministrative expenses also. <\/li>\n\n\n\n<li><strong>Finished\nGoods:<\/strong> In financial accounts stock of finished goods is valued at cost or\nmarket price whichever is lower. In cost accounts, finished goods are generally\nvalued at total cost of production. Thus the method of valuation of stock gives\nrise to different results in the sets of books.<\/li>\n<\/ul>\n\n\n\n<p><strong>DIFFERENT BASES FOR DEPRECIATION<\/strong><\/p>\n\n\n\n<p>In cost accounts, the assets may be depreciated on the straight\nline method, whereas in financial accounts, a different method of depreciation such\nas reducing balance method or sinking policy method or a different method is followed.\nThe difference in the method of depreciation followed in these systems of accounts\nresults in a difference of profit.<\/p>\n\n\n\n<p><strong>ABNORMAL LOSS AND GAIN<\/strong><\/p>\n\n\n\n<p>Abnormal losses and abnormal gains are completely kept\nseparate from cost accounts or they are transferred to costing profit and loss\naccount. If they are not included in cost accounts then the profit shown by\nthese two sets of book will vary and adjustment for which has to be done. If\nthese losses are transferred to costing profit and loss account then the profit\nwill tally with the profit as shown by financial accounts. These losses are\nlike\u2014theft, loss by fire, idle time loss etc.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center\" id=\"advantages-of-reconciliation\"><span class=\"ez-toc-section\" id=\"ADVANTAGES_OF_RECONCILIATION\"><\/span><strong>ADVANTAGES OF RECONCILIATION<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The advantages of reconciliation are as follows:<\/p>\n\n\n\n<ul>\n<li>The arithmetical accuracy can be checked in both\nthe sets of books.<\/li>\n\n\n\n<li>It helps in detecting frauds as for example; any\nwrong entry of stock of material in stores ledger owing to theft can be brought\nto light by comparing with the stock of financial accounts.<\/li>\n\n\n\n<li>It enables to set right under or over absorption\nof overheads in cost accounts by making use of supplementary rates.<\/li>\n\n\n\n<li>Separate maintenance of cost accounts has the\nadvantage of exemption from statutory audit as the purpose of cost accounts is\nto ascertain and control cost rather than ascertainment of profit.<\/li>\n\n\n\n<li>Reconciliation facilitates location of areas of\ninefficiencies.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center\" id=\"methods-or-procedure-of-reconciliation\"><span class=\"ez-toc-section\" id=\"METHODS_OR_PROCEDURE_OF_RECONCILIATION\"><\/span><strong>METHODS OR PROCEDURE OF RECONCILIATION<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p style=\"font-size:26px\"><strong> RECONCILIATION STATEMENT<\/strong><\/p>\n\n\n\n<p>Reconciliation statement is a popular and important method\nof cost accounts and financial accounts. The method or procedure of preparing\nreconciliation statement. The following method or procedure is recommended for\npreparing a Reconciliation Statement:<\/p>\n\n\n\n<p>(i) Ascertain the reasons\/points of difference between cost\naccounts and financial accounts.<\/p>\n\n\n\n<p>(ii) Start with the profit as shown by the cost accounts.<\/p>\n\n\n\n<p>(iii) (a) Regarding items of expenses and losses:<\/p>\n\n\n\n<p><strong>Add: <\/strong>Items\nover-charged in cost accounts.<\/p>\n\n\n\n<p><strong>Less: <\/strong>Items\nunder-charged in cost accounts.<\/p>\n\n\n\n<p><strong>Example:<\/strong> Depreciation\nin cost accounts is 3,000 and that in financial accounts is 3,400. This has the\neffect of increasing costing profit by 400 as compared to financial profit.\nThen in order to reconcile, 400 will be deducted from costing profit.<\/p>\n\n\n\n<p>(b) Regarding items of income:<\/p>\n\n\n\n<p><strong>Add:<\/strong> Items\nunder-recorded in cost accounts.<\/p>\n\n\n\n<p><strong>Less:<\/strong> Items\nover-recorded in cost accounts.<\/p>\n\n\n\n<p><strong>Example:<\/strong> Interest\non investments received amounting to 3,000 is not recorded in cost accounts.\nThis will have the effect of reducing profit by 3,000. Then in order to\nreconcile, this amount of 3,000 for interest should be added in the costing\nprofit.<\/p>\n\n\n\n<p>(c) Regarding stock valuation: Opening\nstock<\/p>\n\n\n\n<p><strong>Add:<\/strong>\nOver-valuation in cost accounts.<\/p>\n\n\n\n<p><strong>Less: <\/strong>Under-valuation\nin cost accounts. <\/p>\n\n\n\n<p>Closing stock<\/p>\n\n\n\n<p><strong>Add:<\/strong>\nUnder-valuation in cost accounts.<\/p>\n\n\n\n<p><strong>Less:<\/strong> Over-valuation\nin cost accounts.<\/p>\n\n\n\n<p>&nbsp;(iv) The above\ntreatment of items will be reversed when the starting point in the reconciliation\nstatement is the profit as per financial accounts or loss as per cost accounts.<\/p>\n\n\n\n<p>(v) After making all the above additions and deductions in\ncosting profit, the resulting figure shall be the profit as per financial\nbooks.<\/p>\n\n\n\n<p>(vi) At some places, \u2018Memorandum Reconciliation Account\u2019 is\nprepared in place of \u2018Reconciliation Statement.\u2019<\/p>\n\n\n\n<p>(vii) The following formula for easy reconciliation (with\ncost profit):<\/p>\n\n\n\n<p><strong>For Expenses items: <\/strong>Add\nthe excess, deduct the shortage.<\/p>\n\n\n\n<p><strong>For Income items:<\/strong>\nAdd the shortage, deduct the excess.<\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong>Proforma of Reconciliation Statement<\/strong><\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong>For the year ending&#8230;&#8230;&#8230;..<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>\n  <strong>PARTICULARS<\/strong>\n  <\/td><td>\n  <strong>AMOUNT<\/strong>\n  <\/td><\/tr><tr><td>   <strong><em>PROFIT AS PER COST ACCOUNTS:<\/em><\/strong>   <br><strong>ADD:<\/strong>   &nbsp;<br>(i) Items of income included in financial accounts but not in cost accounts.    &nbsp;<br>(ii) Items of expenditure (as interest on capital, rent on owned premises etc.) included in cost accounts but not in financial accounts.    &nbsp;<br>(iii) Amounts by which items of expenditure have been shown in excess in cost accounts as compared to the corresponding entries in financial accounts.    &nbsp;<br>(iv) Amounts by which items of income have been shown in excess in financial accounts as compared to the corresponding entries in cost accounts.    &nbsp;<br>(v) Over absorption of overheads in cost accounts.   &nbsp;<br>(vi) The amount by which closing stock of inventory is undervalued in cost accounts.    &nbsp;<br>(vii) The amount by which the opening stock of inventory is overvalued in cost accounts.    <br><strong>DEDUCT:<\/strong>   &nbsp;<br>(i) Items of income included in cost accounts but not in financial accounts.    &nbsp;<br>(ii) Items of expenditure included in financial accounts but not in cost accounts.    (iii) Amounts by which items of income have been shown in excess in cost accounts over the corresponding entries in financial accounts.    &nbsp;<br>(iv) Amounts by which items of expenditure have been shown in excess in financial accounts over the corresponding entries in cost accounts.    <br>(v) Under absorption of overhead in cost accounts.   &nbsp;<br>(vi) The amount by which closing stock of inventory is overvalued in cost accounts.    (vii) The amount by which the opening stock of inventory is undervalued in cost accounts.   <br><strong><em>PROFITS AS PER FINANCIAL ACCOUNTS<\/em><\/strong>   <\/td><td>\n  &nbsp;\n  <\/td><\/tr><\/tbody><\/table><figcaption class=\"wp-element-caption\"><strong><strong>RECONCILIATION OF COST AND FINANCIAL ACCOUNTS<\/strong><\/strong><\/figcaption><\/figure>\n\n\n\n<p style=\"font-size:26px\"><strong>MEMORANDUM\nRECONCILIATION ACCOUNT<\/strong><\/p>\n\n\n\n<p>This account is presented in debit and credit form but it is\nnot a part of double entry system of book-keeping. So it is kept as a\nmemorandum account only.<\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong>Memorandum Reconciliation Account<\/strong><\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong>As on&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;..<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>\n  <strong>PARTICULARS<\/strong>\n  <\/td><td>\n  <strong>Rs.<\/strong>\n  <\/td><td>\n  <strong>PARTICULARS<\/strong>\n  <\/td><td>\n  <strong>Rs.<\/strong>\n  <\/td><\/tr><tr><td>\n  To Expenses not recorded in cost\n  Accounts\n  <\/td><td>\n  &nbsp;\n  <\/td><td>\n  By Profits as per cost accounts\n  <\/td><td>\n  &nbsp;\n  <\/td><\/tr><tr><td>\n  To Overheads under-absorbed in cost accounts\n  <\/td><td>\n  &nbsp;\n  <\/td><td>\n  By Incomes not recorded in cost accounts\n  <\/td><td>\n  &nbsp;\n  <\/td><\/tr><tr><td>\n  To Under-valuation of opening stock in cost accounts\n  <\/td><td>\n  &nbsp;\n  <\/td><td>\n  By Expenses not recorded in profit and\n  loss account\n  <\/td><td>\n  &nbsp;\n  <\/td><\/tr><tr><td>\n  To Over-valuation of closing stock in cost accounts\n  <\/td><td>\n  &nbsp;\n  <\/td><td>\n  By Overheads over-absorbed in cost\n  accounts\n  <\/td><td>\n  &nbsp;\n  <\/td><\/tr><tr><td>\n  To Profits as per profit and loss accounts\n  <\/td><td>\n  &nbsp;\n  <\/td><td>\n  By Over-valuation of opening stock in\n  cost accounts\n  <\/td><td>\n  &nbsp;\n  <\/td><\/tr><tr><td>\n  &nbsp;\n  <\/td><td>\n  &nbsp;\n  <\/td><td>\n  By Under-valuation of closing stock in\n  cost accounts\n  <\/td><td>\n  &nbsp;\n  <\/td><\/tr><\/tbody><\/table><figcaption class=\"wp-element-caption\"><strong>RECONCILIATION OF COST AND FINANCIAL ACCOUNTS<\/strong><\/figcaption><\/figure>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/cost-accounting\/\">Cost Accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/scope-of-cost-accounting-pdf\/\">Scope of cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/elements-of-cost\/\">Elements of cost<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/types-of-cost\/\">Types of cost<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/\">Material control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/perpetual-inventory-system\/\">Perpetual inventory system<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/pricing-of-materials\/\">Pricing of materials<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/bin-card\/\">Bin Card<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/store-ledger\/\">Stores Ledger<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/incentive-plans\/\">Incentive plans<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/overhead\/\">Overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/accounting-treatment-of-idle-time\/\">Idle time<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/system-of-wage-payment-in-cost-accounting\/\">System of wage payment in cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-time-rate-system-and-piece-rate-system\/\">Time rate vs piece rate wage system<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-centre\/\">Cost Center<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/labor-turnover\/\">Labour Turnover<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/difference-between-management-accounting-and-cost-accounting\/\">Difference between management accounting and cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/allocation-and-apportionment-of-overheads\/\">Allocation and apportionment of overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-allocation-and-apportionment-of-overheads\/\">Allocation vs Apportionment of overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/absorption-of-overheads\/\">Absorption of overheads<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/over-absorption-and-under-absorption-of-overheads\/\">Over absorption and under absorption of overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/activity-based-costing\/\">Activity based costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-traditional-costing-and-activity-based-costing\/\">Traditional costing vs ABC system<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/reconciliation-of-accounts\/\">Reconciliation of accounts<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/unit-costing\/\">Unit costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-sheet-format\/\">Cost sheet format<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-sheet-vs-production-account\/\">Cost sheet vs production sheet<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/job-costing\/\">Job costing<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/batch-costing\/\">Batch Costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-job-costing-and-batch-costing\/\">job costing vs batch costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/contract-costing\/\">Contract costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-job-costing-and-contract-costing\/\">Job Costing vs Contract costing<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/process-costing\/\">Process Costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/process-costing-vs-job-costing\/\">Process costing vs job costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/joint-products\/\">Joint products<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/by-products\/\">By Product&nbsp;<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/equivalent-production\/\">Equivalent production<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/marginal-costing\/\">Marginal costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/applications-of-marginal-costing\/\">Application of marginal costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-volume-profit-analysis\/\">Cost volume profit analysis<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/tools-and-techniques-of-marginal-costing\/\">Tools and techniques of marginal costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/budget\/\">Budget<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/break-even-point\/\">Break even point<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/process-of-budgetary-control\/\">Process of budgetary control<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/explain-the-advantages-and-limitations-of-budgetary-control\/\">Advantages and limitations of budgetary control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/budgetary-control\/\">Budgetary Control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/zero-base-budgeting\/\">Zero base budgeting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/standard-costing\/\">Standard Costing<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/variance-analysis\/\">Variance Analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-standard-costing-and-budgetary-control\/\">Standard costing vs budgetary control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-management-accounting-and-cost-accounting\/\">Management accounting vs cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-financial-accounting-management-accounting-and-cost-accounting\/\">Cost accounting vs financial accounting<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noreferrer noopener\">CONNECT ON LINKEDIN<\/a><\/div>\n<\/div>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"152\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-cropped-Presentation-resize-1.jpg\" alt=\"RECONCILIATION OF COST AND FINANCIAL ACCOUNTS\" class=\"wp-image-4836\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-cropped-Presentation-resize-1.jpg 512w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-cropped-Presentation-resize-1-300x89.jpg 300w\" sizes=\"(max-width: 512px) 100vw, 512px\" \/><figcaption class=\"wp-element-caption\">RECONCILIATION OF COST AND FINANCIAL ACCOUNTS<\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>RECONCILIATION OF COST AND FINANCIAL ACCOUNTS Reconciliation of Cost and Financial Accounts: When cost accounts and financial accounts are separately maintained in two different sets of books, two profit and loss accounts will be prepared\u2014one for costing books and second for financial books. The profit or losses shown by the cost accounts may not agree&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/reconciliation-of-cost-and-financial-accounts\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;RECONCILIATION OF ACCOUNTS&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":3371,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[187],"tags":[],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3369"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=3369"}],"version-history":[{"count":1,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3369\/revisions"}],"predecessor-version":[{"id":7300,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3369\/revisions\/7300"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/3371"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=3369"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=3369"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=3369"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}