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Cost Accounting – II
Notes Following is the proforma of memorandum reconciliation account:
Memorandum Reconciliation Account
As on..........................
Particulars (`) Particulars (`)
To Expenses not recorded in cost ... By Profits as per cost accounts ...
accounts
To Overheads under-absorbed in cost ... By Incomes not recorded in cost accounts ...
accounts
To Under-valuation of opening stock in ... By Expenses not recorded in profit and ...
cost accounts loss account
To Over-valuation of closing stock in cost ... By Overheads over-absorbed in cost ...
accounts accounts
To Profits as per profit and loss accounts ... By Over-valuation of opening stock in ...
cost accounts
By Under-valuation of closing stock in ...
cost accounts
... ...
Task Name five items which are included in financial accounts but not in cost accounts
and explain their effect on the profit shown by cost accounts.
Self Assessment
Fill in the blanks:
11. Separate maintenance of cost accounts has the advantage of exemption from
…………………… audit.
12. Reconciliation facilitates location of areas of …………………….
13. The cost and financial accounts are reconciled by preparing a Reconciliation Statement or
a …………………… Reconciliation Account.
14. Memorandum Reconciliation Account is presented in debit and credit form but it is not a
part of …………………… system of book-keeping.
15. The purpose and objective of financial accounting is …………………… reporting mainly
to owners, creditors, tax authorities, government and investors.
Caselet Profit and Loss Account
he Jai Workshop started on 1st January, 2008, manufacturing two types of machines
styled as X and Y. You are asked to prepare a statement showing the cost of each
Ttype of machine as well as profit on its sale.
Materials used for manufacturing X and Y type were ` 1,25,000 and ` 75,000 respectively,
while the labour charges were ` 75,000 and ` 60,000. Works oncost was charged at 70% on
labour and office oncost at 20% on works cost.
Contd...
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