FeaturesAdvantages In integrated account ledger system has a number of features

Featuresadvantages in integrated account ledger

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Features/Advantages In integrated account, ledger system has a number of features which may be viewed as preferable to the interlocking ledger system. In the recent decade, there has in fact been a movetowards greater integration of accounting information requirements in a single unified system (an integrated ledger system). Such an integrated ledger system has the following advantages 1. Only one set of account is maintained and therefore there would be one profit results hence no need of reconciling. 2. There is no duplication of work hence a saving in clerical cost. 3. Information obtained can be used by the management for decision making as well as for financial reporting purposes. 4. Integrated account system help to coordinate the various forms of an organization. 5. It facilitates the use of IT systems. 6. Cost data can be obtained without delay as cost accounts are posted directly from the basics of original entry. Disadvantages 1) Differences in the valuation of stock – In financial accounting stock is valued base on the lower of cost and net realizable value whole in cost accounting stock is valued based on the input cost. The difference in the valuation often brings a challenge in integrated accounts.
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STUDY TEXT 103 MANAGEMENT ACCOUNTING 2) Problems associated with items appearing in cost accounting only e.g. overhead absorption, notion cost and changing of depreciation based on the usage. Items of expenditure that is unique to the two systems of accounting . i. Appropriations of profits not dealt within the costing systems e.g. corporations tax, dividends paid and proposed etc. ii. Expenditure of a purely financial nature (i.e. nothing to do with manufacturing e.g. losses on sale of fixed assets, interest on bank loans, bank charges etc. In the financial Systems, the required ledgers are: a) The General Ledger b) Debtors Ledger (or Sales ledger) c) Creditors Ledger (or Purchases ledger) In the cost book-keeping system, the required ledgers are: i) General Ledger Adjustment Account: It is sometimes called the cost ledger account. ii) All the items extracted from the financial account are recorded in this account. The balance in this account represents the total of all the balances of the impersonal accounts extracted from the financial books. It completes the double entry in the cost accounts. iii) Stores Ledger Control Account: This account shows all the transaction of materials e.g. purchases, issuance of materials, returns to suppliers, etc. The balance of this account represents in total the detailed balance of the stores account. iv) Work in Progress Ledger Control Account: It shows the total work in progress at any particular time. v) Finished Goods Ledger Control Account: Receipts from production and transfer to distribution department are entered in this account and the balance of this account shows the total value of finished goods in stock.
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