Financial Information Student Financial Planning Student Accounts
Reconciliation of Cost & Financial Records of Cost & Financial Records Financial Accounts....
Transcript of Reconciliation of Cost & Financial Records of Cost & Financial Records Financial Accounts....
Reconciliation of Cost &
Financial Records
Financial Accounts.
• Introduction:
Financial accounts are the records of the financial dealings of the
business, their every day transactions.
• The main role of financial accounting is to :
a) Record financial transactions like collecting money from sales,
paying suppliers, salaries and wages
b) Help the managers to manage the business e.g. monthly accounts showing sales , cost and profit
against budgets, Forecasting cash flows , cost
investigations.
c) Provide other stakeholders with legal/vital
information (financial accounts: trading account,
profit and loss , balance sheet)
Financial Statements
• Financial statements divided in 5 parts:
a) Manufacturing Account: Statement used in accounting process of
a manufacturing organization. This financial statement does not
show profit and loss figures but rather the cost of direct materials
and labour . A manufacturing account also includes production
overhead.
b) Trading account: An account with a broker that enables an
individual or other party to buy and sell securities.
c) Profit & Loss Account: A statement shows the position of Profit or
Loss made by the organization.
d) Profit & Loss Appropriation: The Profit & Loss appropriation
account should be treated as a separate account from the Profit &
Loss account. The appropriation account is designated to provide
an indication of how profit transferred from the Profit & Loss account
is spent.
e) Balance sheet: A Statement that shows the financial position of an
entity on a specified date (usually the last day of an accounting
period.)
Cost accounts
Introduction: It is the cost application of costing and cost accounting principles,
methods and techniques to the science, art and practice of cost
control and the ascertainment of Profitability.
Performa of Cost Sheet Particulars Total Cost Rs. Cost Per unit Rs.
Opening stock of Raw materials xxx xxx
ADD: Purchases xxx xxx
ADD: Carriage Inward xxx xxx
ADD: Octroi & Custom Duty xxx xxx
Less: Closing stock of raw materials xxx xxx
Cost of Direct materials consumed xxx xxx
Direct wages xxx xxx
Direct or chargeable expenses xxx xxx
PRIME COST xxx xxx
Particulars Total Cost Rs. Cost Per unit Rs.
ADD: WORKS or Factory Overheads
Indirect Materials xxx xxx
Indirect wages xxx xxx
Leave wages xxx xxx
Bonus to workers xxx xxx
Overtime wages xxx
Fuel & Power xxx
Rent & Taxes xxx
Insurance xxx
Works salary xxx
Depreciation of Plant & Machinery xxx
factory Lightings xxx
Supervision xxx
Works stationery xxx
Canteen & Welfare Expenses xxx
Repairs xxx
Particulars Total Cost Rs. Cost Per unit Rs.
Subscription to trade Journals xxx
Office Lightings xxx
Establishment Charges xxx
Directors Travelling expenses xxx
Consultants Fees xxx
Contribution to Provident fund xxx
Postage xxx
Legal charges xxx
Audit fees xxx
Bank charges xxx
Depreciation & Repairs of Office Equipment xxx
Bonus to Staff xxx
COST OF PRODUCTION xxx xxx
ADD: Opening stock of Finished goods xxx xxx
Less: Closing stock of Finished goods xxx xxx
COST OF GOODS SOLD xxx xxx
Particulars Total Cost Rs. Cost Per unit Rs.
ADD : Selling & Distribution Overheads:
Advertising xxx
Show Room Expenses xxx
Sales man salary & Expenses xxx
Packing expenses xxx
Carriage outward xxx
Commission of sales agent xxx
Cost of Catalogues xxx
Expenses of Delivery vans xxx
Collection charges xxx
Travelling expenses xxx
Cost tender xxx
Warehouse expenses xxx
Cost of mailing literature xxx
Sales manager salary xxx
Insurance of Show room xxx
Particulars Total Cost Rs. Cost Per unit Rs.
Works expenses Xxx
Gas & Water Xxx
Technical Director’s Fees xxx
Laboratory Expenses xxx
Works Transport Expenses xxx
Works telephone Expenses xxx
ADD: Opening stock of Work in progress xxx xxx
Less: Closing stock of Work in progress xxx xxx
Less: Sale of Waste xxx xxx
WORKS COST xxx xxx
ADD: Office & Administration Overheads:
Office salaries xxx
Director’s fees xxx
Office Rent & Rates xxx
Sundry Office Expenses xxx
Depreciation on Office Furniture xxx
Particulars Total Cost Rs. Cost Per unit Rs.
Sales Director’s fees xxx
Sales office expenses xxx
Rent of sales office xxx
Depreciation of Delivery vans xxx
Expenses of sales branch xxx
Establishments xxx
Branch office expenses xxx
TOTAL COST / TOTAL OF SALES xxx xxx
Profit or Loss xxx xxx
SALES xxx xxx
Note: 1)Cost per unit can be calculated as follows:
• Till Cost of production – units produced
• Opening stock of finished goods – Given
• Closing stock of finished goods – CPU of COP (as
per AS 3 – Works cost) • After closing stock of finished goods till end – units
sold.
Following Items are to be ignored in the cost sheet
a) Advance tax paid
b) Cash discount allowed on sales
c) Dividend paid
d) Dividend received
e) Debenture interest
f) Donation paid
g) Interest received
h) Interests paid on Loan
i) Income tax paid
j) Interests paid on Bank overdraft
k) Income tax refund
l) Interest on capital
m) Bad debts
n) Loss on sale of Fixed asset / Investment
o) Purchase of Fixed asset / Investment
p) Sale of Fixed asset/ Investment
q) Profit on sale of Fixed asset /Investment
r) Non operating income such as discount received
Reconciliation
• Meaning:
• An accounting process used to compare two sets of records to
ensure the figures are in agreement and are accurate.
• Reconciliation is the key process used to determine whether the
money leaving an account matches the amount spent , ensuring the
true values are balanced at the end of recording period .
Golden Rule for Reconciliation
DO WHAT OTHERS HAVE DONE ON
PROFIT
Format of Reconciliation
Particulars Amt Amt
Profit as per Cost Account
ADD:
LESS:
Profit as per Financial Account
OR
Profit Reconciliation Statement for the period
ended_______.
Particulars Amt Amt
Profit as per Financial Account
ADD:
LESS:
Profit as per Cost Account
Profit Reconciliation Statement for the period ended___-.
Practical Problems.
Problem :1
Solution.