Page 36 - DCOM206_COST_ACCOUNTING_II

Unit 2: Reconciliation of Cost and Financial Accounting

(iv) The above treatment of items will be reversed when the starting point in the Notes
reconciliation statement is the profit as per financial accounts or loss as per cost
accounts.
(v) After making all the above additions and deductions in costing profit, the resulting
figure shall be the profit as per financial books.

(vi) At some places, ‘Memorandum Reconciliation Account’ is prepared in place of
‘Reconciliation Statement.’
(vii) The following formula for easy reconciliation (with cost profit):

For Expenses items: Add the excess, deduct the shortage.
For Income items: Add the shortage, deduct the excess.
Following is the proforma of a reconciliation statement:
Proforma of Reconciliation Statement
For the year ending...........

Particulars Amount (`) Amount (`)
(+) ( )
Profit as per Cost Accounts ...
Add: (i) Expenses over-charged in cost account ...
(ii) Income not included in cost account ...
(iii) Over-valuation of opening stock in cost account ...
(iv) Under-valuation of closing stock in cost account ...
(v) Expenses recorded in cost account but not charged in financial ...
account
(vi) Income recorded in financial books but not recorded in cost ...
books
(vii) Items credited in financial books but not recorded in cost books ...
(viii) Depreciation over-charged in cost account ... ...
...
Less: (i) Expenses under-charged in cost account
(ii) Expenses not charged in cost account ...
(iii) Under-valuation of opening stock in cost account ...
(iv) Over-valuation of closing stock in cost account ...
(v) Expenses not recorded in cost books but recorded in financial ...
books
(vi) Items debited in financial books but not recorded in cost books ... ...
Profit as per Financial Accounts ...

(B) Memorandum Reconciliation Account: This account is presented in debit and credit form
but it is not a part of double entry system of book-keeping. So it is kept as a memorandum
account only.

!
Caution The procedure of its preparation is similar to that of reconciliation statement, the
only difference is that items shown under “+” column are shown on the credit side and
items shown under “ – “ column are shown on the debt side of the memorandum
reconciliation account.

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