RECONCILATION OF COST AND FINANCIAL AC cost mcq notes


Posted on 10-05-2016        By ADMIN

RECONCILATION OF COST AND FINANCIAL AC cost mcq notes Causes of differences:- 1) Purely financial items : i) Appropriation of profits ?Transferred to reserves, goodwill, preliminary expenses, dividend paid etc. ii) Loss on sale of investment, penalties and fines iii) Income ? Interest received on Bank deposits, profit on sale of investments, fixed assets, transfer fees. 2) Purely cost account items: - Notional Rent / Interest / Salary 3) Valuation of stock:- i) Raw-material = In financial a/c’s stock is valued at cost or market value Whichever is less, while in cost a/c’s it is valued at LIFO, FIFO etc. ii) Work in progress = In financial a/c’s administrative expenses are also considered while valuing stock, but in cost a/c’s it may be valued at prime (or) factory cost (or) cost of production iii) Finished Goods = In financial a/c’s it is valued at cost or market price whichever is less, in cost a/c’s it is valued at total cost of production


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