12

Reconciliation of Cost and Financial Accounts

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

  1. Appraise the need for reconciliation between cost and financial accounts.

  2. Identify the causes of difference between cost and financial accounts.

  3. Prepare a reconciliation statement (memorandum reconciliation account).

  4. Enumerate the advantages of reconciliation.

  5. Explain the meaning of certain key terms.

Some organizations maintain separate set of books of account for financial accounting and cost accounting purposes. As already explained in previous chapters, such a system is referred to as ‘non-integral system’. As the objectives of these two systems vary, the profit shown by financial books will vary from the profit ...

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