Cost Record & Reconciliation of A/c
There are two systems of accounting viz. financial and cost accounts and they both co exists in same organisation. However there is different in collection, analysis and presentation of data and hence there is difference in profits by both methods. Due to this reason a reconciliation statement is prepared.
INSTALLATION OF A COSTING SYSTEM
Costing system of an organization depends upon following factors:
Objective of Costing System: The system will be simple if the only objective of the costing system is to fix price of the goods and services however costing system must provide detailed information if the aim is to measure efficiency, control, etc. If there is any legal requirement then such legal provisions must obviously be kept in mind.
Decision-Making Points: The levels of management which requires information also determine the depth, frequency and format of the information that the costing system will have to provide and this factor also affects the costing system of an organization.
Significant Operations In The Organization: Costing must pay more attention to areas which account for the large part of organization expenditure. For example in case of production unit it will be production department.
Accuracy Required: Cost accounts must be correct and accurate else Cost accounts will prove to be misleading and management would take wrong decision on such false information.
Flexible: The cost accounting system should be Flexible and capable of adapting itself to different situiations.
Comparability Of The Costing Records: The costing records must be maintained in such a way that the result of one accounting period can be compared with the results of any other accounting period. The records of the previous accounting period must be able to act as a guide for the future accounting period.
Observance Of Instructions Provided My Management: The cost accountant must carefully obey the instructions provided to them by the management.
Reconciliation Of Cost Accounts With Financial Accounts: The whole system should be maintained in such a manner as to make reconciliation between cost accounts and financial accounts easy and simple.
These online MCQ Mock tests and MCQ questions includes all main concepts of the chapter (Reconciliation of Cost & Financial A/c) in CS Executive Module I Cost and Management Accounting (MCQ based OMR) Exam.