CHAPTER 16: COST RECONCILIATION STATEMENT
Format of Cost Reconciliation Statements
a. Taking the profit as per cost account or loss of financial account
Cost Reconciliation Statement As on…
| Particulars | Detail (Rs.) | Amount (Rs.) |
|---|---|---|
| Profit as per cost account or Loss as per financial account | XXX | |
| Add: | ||
| i. Overcharge of expenses in cost account | XXX | |
| ii. Items of expenses recorded only on cost account | XXX | |
| iii. Items of income recorded only in financial account | XXX | |
| iv. Amount of understated income in cost account | XXX | |
| v. Over-valuation of opening stock in cost account | XXX | |
| vi. Under-valuation of closing stock in cost account | XXX | XXX |
| Less: | ||
| i. Undercharge of expenses in cost account | XXX | |
| ii. Items of expenses recorded only in financial account | XXX | |
| iii. Income shown in cost account, but not in financial Account | XXX | |
| iv. Amount of income overstated in cost account | XXX | |
| v. Under-valuation of opening stock in cost account | XXX | |
| vi. Over-valuation of closing stock in cost account | XXX | |
| vii. Bad debts only recorded in financial account | XXX | XXX |
| Profit as per financial account or Loss as per cost account | XXX |
b. Taking the profit as per financial account or loss of cost account
Cost Reconciliation Statement As on…
| Particulars | Detail (Rs.) | Amount (Rs.) |
|---|---|---|
| Profit as per financial account or Loss as per cost account | XXX | |
| Add: | ||
| i. Undercharge of expenses in cost account | XXX | |
| ii. Items of expenses recorded only in financial account | XXX | |
| iii. Income shown in cost account, but not in financial account | XXX | |
| iv. Amount of income overstated in cost account | XXX | |
| v. Under-valuation of opening stock in cost account | XXX | |
| vi. Over-valuation of closing stock in cost account | XXX | XXX |
| Less: | ||
| i. Overcharge of expenses in cost account | XXX | |
| ii. Items of expenses recorded only on cost account | XXX | |
| iii. Items of income recorded only in financial account | XXX | |
| iv. Amount of understated income in cost account | XXX | |
| v. Over-valuation of opening stock in cost account | XXX | |
| vi. Under-valuation of closing stock in cost account | XXX | XXX |
| Profit as per cost account or Loss as per financial account | XXX |
THEORETICAL QUESTIONS
1. What is meant by cost reconciliation statement?
A cost reconciliation statement determines the items required to bring cost and financial accounts or statements into agreement. The goal of cost reconciliation is to determine the reasons for the discrepancy between costing profit and financial profit.
2. Why is the cost reconciliation statement prepared?
A cost reconciliation statement is created to reconcile the differences in net profits indicated by cost and financial accounts. The reconciliation statement serves as a foundation for verifying the arithmetic accuracy of the incomes and expenses recorded in the two accounting systems.
NUMERICAL PROBLEMS: NET PROFIT AS PER COST ACCOUNT
SHORT ANSWER QUESTIONS
1. 2079 GIE Set B Q.No. 18II
On reconciliation of financial and cost account following informations were disclosed:
| Net profit | Cost Account (Rs.) | Financial Account (Rs.) |
|---|---|---|
| Net profit | 65,000 | ? |
| Factory expenses | 25,000 | 27,000 |
| Interest received | – | 5,000 |
| Closing stock | 1,25,000 | 1,37,000 |
Required: Reconciliation statement of financial and cost account.
Solution:
Reconciliation Statement between Financial and Cost Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per cost account | 65,000 | |
| Add: | ||
| i. Interest received not recorded in cost account | 5,000 | |
| ii. Over valuation of closing stock in financial account | 12,000 | 17,000 |
| 82,000 | ||
| Less: | ||
| i. Factory overhead over absorbed in financial account (Note: Should be “under absorbed” or adjusted based on logic, but preserving source calculation structure: 27k vs 25k is under-absorbed in cost or over in financial? It is under-charged in cost. The solution subtracts 2,000.) | 2,000 | 2,000 |
| Net profit as per financial account | 80,000 |
2. 2079 Set O Q.No. 18II
Following information are given:
- a. Net profit shown by cost account Rs. 80,000.
- b. Factory overhead over recorded in financial account Rs. 15,000.
- c. Depreciation under charge in cost account Rs. 6,000.
- d. Dividend received recorded in financial account Rs. 12,500.
- e. Over valuation of closing stock in financial account Rs. 10,000.
Required: Cost reconciliation statement.
Solution:
Reconciliation Statement between Financial and Cost Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per cost account | 80,000 | |
| Add: | ||
| i. Dividend received recorded in financial account | 12,500 | |
| ii. Over valuation of closing stock in financial account | 10,000 | 22,500 |
| 1,02,500 | ||
| Less: | ||
| i. Factory overhead over recorded in financial account | 15,000 | |
| ii. Depreciation under charged in cost account | 6,000 | 21,000 |
| Net profit as per financial account | 81,500 |
3. 2079 Set V Q.No. 18II
On reconciliation of cost account and financial account following facts were located:
- a. Depreciation:
On financial account: Rs. 40,000
On cost account: Rs. 35,000 - b. Opening stock:
On financial account: Rs. 75,000
On cost account: Rs. 90,000 - c. Income tax shown in financial account: Rs. 4,000
- d. Net profit as per financial account: Rs. 1,10,000
Required: Reconciliation statement of cost and financial account.
Solution:
Reconciliation Statement between Financial and Cost Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 1,10,000 | |
| Add: | ||
| i. Income tax shown in financial account | 4,000 | |
| ii. Depreciation over recorded in financial account (40,000 – 35,000) | 5,000 | 9,000 |
| 1,19,000 | ||
| Less: | ||
| i. Opening stock over valuation in cost account (90,000 – 75,000) | 15,000 | 15,000 |
| Net profit as per cost account (Calculated as 1,19,000 – 15,000) | 1,04,000 |
4. 2078 Set C Q.No. 22
Net profit as per cost account was Rs. 40,000. On reconciliation, the following facts were noticed:
- a. Factory overhead over recorded in cost account Rs. 5,000.
- b. Income tax payment recorded in financial account Rs. 2,000.
- c. Over valuation of closing stock in financial account Rs. 7,000.
- d. Share transfer fees Rs. 1,000 only recorded in financial account.
Required: Reconciliation between cost and financial account.
Solution:
Reconciliation Statement between Financial and Cost Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per cost account | 40,000 | |
| Add: | ||
| i. Factory overhead over recorded in cost account | 5,000 | |
| ii. Over valuation of closing stock in financial account | 7,000 | |
| iii. Share transfer fees recorded in financial account | 1,000 | 13,000 |
| 53,000 | ||
| Less: | ||
| i. Income tax payment recorded in financial account | 2,000 | 2,000 |
| Net profit as per financial account | 51,000 |
5. 2076 GIE Set A Q.No. 22
Net profit as shown by cost account Rs 40,000. On reconciliation with financial account the following facts were disclosed:
| Head of expenditures | Financial Account (Rs.) | Cost Account (Rs.) |
|---|---|---|
| Factory expenses | 45,000 | 55,000 |
| Opening stock | 1,25,000 | 1,15,000 |
| Closing stock | 75,000 | 80,000 |
| Interest received | 4,000 | – |
| Bad debts | 2,000 | – |
Required: Reconciliation between cost and financial account.
Solution:
Reconciliation Statement between Financial and Cost Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per cost account | 40,000 | |
| Add: | ||
| i. Factory expenses overcharged in cost account (55,000 – 45,000) | 10,000 | |
| ii. Interest received only recorded in financial account | 4,000 | 14,000 |
| 54,000 | ||
| Less: | ||
| i. Opening stock undercharged in cost account (125,000 – 115,000) | 10,000 | |
| ii. Closing stock overcharged in cost account (80,000 – 75,000) | 5,000 | |
| iii. Bad debts only recorded in financial account | 2,000 | 17,000 |
| Net profit as per financial account | 37,000 |
6. 2076 Set B Q.No. 22
On reconciliation of Financial and Cost Accounting, following informations were disclosed:
- i. Profit shown by cost account Rs. 80,000.
- ii. Works overhead under recovered in cost account Rs. 5,000.
- iii. Office overhead under recovered in financial account Rs. 10,000.
- iv. Depreciation under charged in cost account Rs. 6,000.
- v. A profit on sale of fixed assets was shown on financial account Rs. 5,000.
Required: Reconciliation of Cost and Financial Account.
Solution:
Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per cost account | 80,000 | |
| Add: | ||
| i. Office overhead under recovered in financial account | 10,000 | |
| ii. Profit on sale of fixed assets shown on financial account | 5,000 | 15,000 |
| 95,000 | ||
| Less: | ||
| i. Works overhead under recorded in cost account | 5,000 | |
| ii. Depreciation under charged in cost account | 6,000 | 11,000 |
| Net profit as per financial account | 84,000 |
7. 2076 Set C Q.No. 22
The net profit as shown by cost account is Rs. 1,22,000. The following details are ascertained on comparison of cost and financial account:
- i. Works overhead over recorded in financial account Rs. 30,000
- ii. Office overhead under recorded in cost account Rs. 20,000
- iii. Over valuation of closing stock in financial account Rs. 15,000.
- iv. Dividend received recorded in financial account Rs. 25,000
Required: Reconciliation statement of Cost and Financial Account.
Solution:
Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per cost account | 1,22,000 | |
| Add: | ||
| i. Overvaluation of closing stock in financial account | 15,000 | |
| ii. Dividend received recorded in financial account | 25,000 | 40,000 |
| 1,62,000 | ||
| Less: | ||
| i. Works overhead over recorded in financial account | 30,000 | |
| ii. Office overhead under recorded in cost account | 20,000 | 50,000 |
| Net profit as per financial account | 1,12,000 |
8. 2075 GIE Q.No. 22
The net profit as per cost account of a trader was Rs. 46,500. On reconciliation the following differences were noticed:
- i. Depreciation charged in financial account Rs. 20,000 and on cost account Rs. 24,000.
- ii. Dividend credited in financial account Rs. 3,000.
- iii. Valuation of closing stock:
a. Cost account: Rs. 30,000
b. Financial account: Rs. 36,000 - iv. Office expense over recovered in cost account Rs. 8,000
Required: Reconciliation statement of cost and financial account.
Solution:
Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per cost account | 46,500 | |
| Add: | ||
| i. Depreciation over charged in cost account | 4,000 | |
| ii. Dividend received credited in financial account | 3,000 | |
| iii. Closing stock under valuation in cost account | 6,000 | |
| iv. Office expenses over charged in cost account | 8,000 | 21,000 |
| Net profit as per financial account | 67,500 |
9. 2074 Set A Q.No. 22
The net profit as shown by the cost account of a company is Rs. 60,000. On reconciliation the following facts were disclosed:
- i. Factory overhead has been over recovered in financial account by Rs. 10,000.
- ii. Selling overhead has been under recovered in cost account by Rs. 2,000.
- iii. Closing stock has been over valued in financial account by Rs. 5,000.
- iv. Income tax paid Rs. 7,000.
Required: Reconciliation statement of Cost Account and Financial Account.
Solution:
Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per cost account | 60,000 | |
| Add: | ||
| i. Closing stock over valued in financial account | 5,000 | |
| ii. Factory overhead over recorded in financial account | 10,000 | 15,000 |
| 75,000 | ||
| Less: | ||
| i. Selling overhead under recorded in cost account | 2,000 | |
| ii. Income tax not included in cost account | 7,000 | 9,000 |
| Net profit as per financial account | 66,000 |
10. 2072 Supp Q.No. 22
On comparison of cost and financial accounts, the following facts were disclosed:
- i. Profit as per cost account: Rs. 80,000
- ii. Works overhead overcharged in cost account: Rs. 30,000
- iii. Office overhead overcharged in financial account: Rs. 20,000
- iv. Interest from investments: Rs. 10,000
- v. Over valuation of opening stock in financial account: Rs. 15,000
Required: Reconciliation statement of cost and financial account.
Solution:
Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Profit as per cost account | 80,000 | |
| Add: | ||
| i. Work overhead overcharged in cost account | 30,000 | |
| ii. Interest on investment not recorded in cost account | 10,000 | 40,000 |
| 1,20,000 | ||
| Less: | ||
| i. Office overhead overcharged in financial account | 20,000 | |
| ii. Under valuation of opening stock in cost account (Equivalent to over valuation in financial) | 15,000 | 35,000 |
| Profit as per financial account | 85,000 |
11. 2071 Set C Q.No. 22
The net profit as shown by the cost account is Rs. 1,60,000. On reconciliation the following discrepancies were located:
- i. Factory expenses in financial account Rs. 30,000 and recovered in cost account Rs. 28,000.
- ii. Income tax paid in financial account Rs. 12,000.
- iii. Interest income credited in financial account Rs. 3,000.
- iv. Administrative expenses over recovered in cost account by Rs. 10,000.
Required: Reconciliation statement of cost and financial account.
Solution: Reconciliation Statement between Cost and Financial Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per cost account | 1,60,000 | |
| Add: | ||
| i. Interest income credited in financial account | 3,000 | |
| ii. Administrative expenses over absorbed in cost account | 10,000 | 13,000 |
| Total | 1,73,000 | |
| Less: | ||
| i. Factory expenses under absorbed in cost account | 2,000 | |
| ii. Income tax not included in cost account | 12,000 | 14,000 |
| Net profit as per financial account | 1,59,000 |
12. 2071 Set D Q.No. 22
Net profit as shown by Cost Account is Rs. 20,500. On reconciliation with Financial Account, the following facts were disclosed:
| Heads of Expenditures | Cost Account | Expenses charged in Financial Account |
|---|---|---|
| Direct wages | Rs. 12,000 | Rs. 15,000 |
| Factory Expenses | Rs. 10,000 | Rs. 13,000 |
| Admin. Expenses | Rs. 15,000 | Rs. 12,000 |
| Stock valuation at close | Rs. 25,000 | Rs. 22,000 |
| Bank Interest | Rs. 1,000 |
Required: Reconciliation Statement between Cost and Financial Account Profit.
Solution: Reconciliation Statement between Cost and Financial Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per cost account | 20,500 | |
| Add: | ||
| i. Administrative expenses over charged in cost account | 3,000 | 3,000 |
| Total | 23,500 | |
| Less: | ||
| i. Direct wages undercharged in cost account | 3,000 | |
| ii. Factory expenses undercharged in cost account | 3,000 | |
| iii. Closing stock over valued in cost account | 3,000 | |
| iv. Bank interest debited in financial account | 1,000 | 10,000 |
| Net profit as per financial account | 13,500 |
13. 2068 Q.No. 22
The net profit shown by cost account is Rs. 1,20,000. Reconciling the cost and financial accounts the following descriptions were located:
- i. Works overhead recovered: in financial account Rs. 30,000 and in cost account Rs. 25,000.
- ii. Depreciation charged in financial account Rs. 20,000 and in cost account Rs. 24,000.
- iii. Income tax paid in financial account Rs. 10,000.
- iv. Interest income credited in financial account Rs. 5,000.
Required: Reconciliation statement of cost and financial account.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Profit as per cost account | 1,20,000 | |
| Add: | ||
| i. Depreciation overcharged in cost a/c | 4,000 | |
| ii. Interest received not included in cost a/c | 5,000 | 9,000 |
| Total | 1,29,000 | |
| Less: | ||
| i. Works overhead under absorbed in cost a/c | 5,000 | |
| ii. Income tax not included in cost a/c | 10,000 | 15,000 |
| Net profit as per financial account | 1,14,000 |
14. 2067 Q.No. 22
On comparison of cost and financial accounts, the following facts were disclosed:
- Interest on investments received: Rs. 3,500
- Work overhead over charged in cost a/c: Rs. 5,000
- Administrative overhead over charged in financial a/c: Rs. 2,500
- Over valuation of opening stock in financial a/c: Rs. 2,000
- Under valuation of closing stock in cost a/c: Rs. 3,000
- Net profit as per cost account: Rs. 44,250
Required: Reconciliation statement of cost and financial account.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per cost account | 44,250 | |
| Add: | ||
| i. Interest on investment received recorded only in financial account | 3,500 | |
| ii. Work overhead overcharged in cost account | 5,000 | |
| iii. Under valuation of closing stock in cost account | 3,000 | 11,500 |
| Total | 55,750 | |
| Less: | ||
| i. Overvaluation of opening stock in financial account | 2,000 | |
| ii. Administrative overhead overcharged in financial account | 2,500 | 4,500 |
| Net profit as per financial account | 51,250 |
15. 2066 Supp. Q.No. 22
The net profit as per cost account of a company is Rs. 1,50,000. On reconciliation, the following details are ascertained:
- a. The factory expenses shown in financial account is Rs. 25,000 but the amount recovered in cost account is Rs. 20,000.
- b. Goodwill written off shown in financial account is Rs. 8,000.
- c. Amount credited for dividend in financial account is Rs. 15,000.
- d. Depreciation shown in financial account is Rs. 66,000 but charged in cost account is Rs. 75,000.
Required: Reconciliation statement of cost and financial account.
Solution: Reconciliation Statement between Cost and Financial Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per cost account | 1,50,000 | |
| Add: | ||
| i. Depreciation over charged in cost a/c | 9,000 | |
| ii. Dividend credited in financial account | 15,000 | 24,000 |
| Total | 1,74,000 | |
| Less: | ||
| i. Factory expenses under absorbed in cost account (25,000 – 20,000) | 5,000 | |
| ii. Goodwill written off not shown in cost account | 8,000 | 13,000 |
| Net profit as per financial account | 1,61,000 |
16. 2066 (C) Q.No. 22
The net profit as shown by cost account is Rs. 1,50,000. On verification of two accounts the following details were ascertained:
- i. Works overhead under recovered in cost account Rs. 15,000
- ii. Bank interest credited in financial account Rs. 6,000
- iii. Opening stock:
- Cost account Rs. 50,000
- Financial account Rs. 40,000
- iv. Provision for doubtful debts in financial account Rs. 5,000
- v. A profit of Rs. 10,000 on sale of old machine was dealt in financial account.
Required: Reconciliation statement between financial and cost account.
Solution: Reconciliation Statement between Financial and Cost Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Profit as per cost account | 1,50,000 | |
| Add: | ||
| i. Bank interest credited in financial statement | 6,000 | |
| ii. Opening stock overvalued in cost account | 10,000 | |
| iii. Profit on sale of old machine recorded in financial account | 10,000 | 26,000 |
| Total | 1,76,000 | |
| Less: | ||
| i. Works overhead under-absorbed in cost account | 15,000 | |
| ii. Provision for doubtful debts recorded in financial account | 5,000 | 20,000 |
| Profit as per financial account | 1,56,000 |
17. Supp. Q.No. 22
The following information is provided:
- i. Net profit as per cost account: Rs. 1,00,000
- ii. Works overhead recovered:
- Cost account: Rs. 20,000
- Financial account: Rs. 25,000
- iii. Administrative overhead over-absorbed in cost account: Rs. 8,000
- iv. Bank interest credited in financial account: Rs. 10,000
- v. Income tax paid: Rs. 20,000
Required: Reconciliation statement of cost and financial account.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Profit as per cost account | 1,00,000 | |
| Add: | ||
| i. Administrative overhead over-absorbed in cost account | 8,000 | |
| ii. Bank interest credited in financial account | 10,000 | 18,000 |
| Total | 1,18,000 | |
| Less: | ||
| i. Works overhead over-absorbed in financial account | 5,000 | |
| ii. Income tax not included in cost account | 20,000 | 25,000 |
| Profit as per financial account | 93,000 |
1. 2079 GIE Set A Q.No. 18
Net profit as per financial account was Rs. 1,20,000. On reconciliation, the following facts were disclosed:
- i. Interest expenses recorded in financial account: Rs. 5,000
- ii. Undervaluation of opening stock in cost account: Rs. 4,000
- iii. Income tax paid: Rs. 12,500
Required: Cost reconciliation statement.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 1,20,000 | |
| Add: | ||
| i. Interest expenses recorded in financial account | 5,000 | |
| ii. Undervaluation of opening stock in cost account | 4,000 | |
| iii. Income tax paid recorded in financial account | 12,500 | 21,500 |
| Net profit as per cost account | 1,41,500 |
2. 2077 Set K Q.No. 9
The net profit as shown by the financial account is Rs. 60,000. On reconciliation, the following facts were disclosed:
- i. Overvaluation of opening stock in cost accounting: Rs. 18,000
- ii. Depreciation undercharged in cost account: Rs. 8,000
- iii. Income tax paid: Rs. 9,000
Required: Reconciliation statement of Cost and Financial Account.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 60,000 | |
| Add: | ||
| i. Depreciation undercharged in cost account | 8,000 | |
| ii. Income tax paid shown in financial account | 9,000 | 17,000 |
| Total | 77,000 | |
| Less: | ||
| i. Overvaluation of opening stock in cost accounting | 18,000 | 18,000 |
| Net profit as per cost account | 59,000 |
3. 2076 GIE Set B Q.No. 22
On comparison of Cost Account and Financial Account, the following facts were disclosed:
| Particulars | Cost Account (Rs.) | Financial Account (Rs.) |
|---|---|---|
| Opening stock | 26,000 | 30,000 |
| Works overhead | 50,000 | 30,000 |
| Depreciation | 20,000 | 25,000 |
| Selling overhead | 10,000 | 15,000 |
| Net profit | ? | 90,000 |
Required: Reconciliation statement of Cost and Financial Account.
Solution: Cost Reconciliation Statement of Financial and Cost Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 90,000 | |
| Add: | ||
| i. Opening stock undercharged in cost account | 4,000 | |
| ii. Depreciation overcharged in financial account | 5,000 | |
| iii. Selling overhead overcharged in financial account | 5,000 | 14,000 |
| Total | 1,04,000 | |
| Less: | ||
| i. Works overhead overcharged in cost account | 20,000 | 20,000 |
| Net profit as per cost account | 84,000 |
4. 2075 Set A Q.No. 22
Net profit as per financial account was Rs. 60,000. On reconciliation, the following facts were noticed:
- i. Factory overhead under-recorded in cost account: Rs. 8,000.
- ii. Interest expenses recorded in financial account: Rs. 3,000.
- iii. Overvaluation of opening stock in financial account: Rs. 6,000.
- iv. Income tax paid: Rs. 8,500.
Required: Reconciliation between cost and financial account.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 60,000 | |
| Add: | ||
| i. Factory overhead over-recorded in financial account (Note: Problem states under-recorded in cost, treated as over-recorded in financial for reconciliation logic here) | 8,000 | |
| ii. Interest expenses recorded in financial account | 3,000 | |
| iii. Overvaluation of opening stock in financial account | 6,000 | |
| iv. Income tax paid shown in financial account | 8,500 | 25,500 |
| Net profit as per cost account | 85,500 |
5. 2075 Set B Q.No. 22
The net loss as shown by the financial account of a company is Rs. 30,000. On reconciliation, the following facts were disclosed:
- i. Income tax paid: Rs. 40,000 shown in financial account.
- ii. Administrative expenses overcharged in financial account: Rs. 20,000.
- iii. Interest on investment credited in financial account: Rs. 5,000.
- iv. Depreciation charged in financial account Rs. 10,000 and in cost account Rs. 1,000.
Required: Reconciliation statement of cost and financial account.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net loss as per financial account | (30,000) | |
| Add: | ||
| i. Income tax paid not shown in cost account | 40,000 | |
| ii. Administrative expenses overcharged in financial account | 20,000 | |
| iii. Depreciation overcharged in financial account | 9,000 | 69,000 |
| Total | 39,000 | |
| Less: | ||
| i. Interest on investment not included in cost account | 5,000 | 5,000 |
| Net profit as per cost account | 34,000 |
6. 2074 Supp Q.No. 22
While reconciling the financial and cost accounts, the following facts were disclosed:
i. Net profit as per financial account: Rs. 50,000.
ii. Interest on investment: Rs. 5,000.
iii. Overvaluation of closing stock in cost account: Rs. 10,000.
iv. Administrative expenses overcharged in financial account: Rs. 20,000.
v. Depreciation charged in financial account Rs. 10,000 and in cost account Rs. 15,000.
Required: Reconciliation statement of cost and financial account.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 50,000 | |
| Add: | ||
| i. Overvaluation of closing stock in cost account | 10,000 | |
| ii. Administrative expenses overcharged in financial account | 20,000 | 30,000 |
| Total | 80,000 | |
| Less: | ||
| i. Depreciation over-recorded in cost account | 5,000 | |
| ii. Interest on investment not included in cost account | 5,000 | 10,000 |
| Net profit as per cost account | 70,000 |
7. 2074 Set B Q.No. 22
The net profit shown by the financial statement of a company is Rs. 80,000. While reconciling the cost and financial accounts, the following facts were disclosed:
i. Works Overhead: Cost account: Rs. 15,000; Financial account: Rs. 10,000
ii. Dividend credited to financial A/c: Rs. 8,000
iii. Depreciation charged: Cost account: Rs. 10,000; Financial account: Rs. 1,000
iv. Income tax paid: Rs. 6,000
Required: Reconciliation statement of cost account and financial account.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 80,000 | |
| Add: | ||
| i. Income tax not included in cost account | 6,000 | 6,000 |
| Total | 86,000 | |
| Less: | ||
| i. Works overhead over-recorded in cost account | 5,000 | |
| ii. Depreciation over-recorded in cost account | 9,000 | |
| iii. Dividend received not included in cost account | 8,000 | 22,000 |
| Net profit as per cost account | 64,000 |
8. 2073 Supp Q.No. 22
The net profit as shown by the financial account of a company is Rs. 60,000. On reconciliation, the following facts were disclosed:
i. Works overhead over-recovered in cost account: Rs. 20,000
ii. Depreciation charged: Financial account: Rs. 15,000; Cost account: Rs. 20,000
iii. Overvaluation of opening stock in financial account: Rs. 6,000
iv. Interest received from investment: Rs. 8,000
Required: Reconciliation statement of cost account and financial account.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 60,000 | |
| Add: | ||
| i. Overvaluation of opening stock in financial account | 6,000 | 6,000 |
| Total | 66,000 | |
| Less: | ||
| i. Works overhead over-recorded in cost account | 20,000 | |
| ii. Depreciation over-recorded in cost account | 5,000 | |
| iii. Interest received not included in cost account | 8,000 | 33,000 |
| Net profit as per cost account | 33,000 |
9. 2073 Set C Q.No. 22
The net profit as per financial account of a company is Rs. 60,000. On verification of financial and cost account, the following facts were located:
i. Factory overhead: On cost account: Rs. 30,000; On financial account: Rs. 40,000
ii. Administrative expenses undercharged in financial account: Rs. 12,000
iii. Closing stock overvalued in financial account: Rs. 9,000
iv. Dividend received: Rs. 15,000
Required: Reconciliation statement of cost and financial account.
Solution: Reconciliation Statement between Cost and Financial Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 60,000 | |
| Add: | ||
| i. Factory overhead over recorded in financial account | 10,000 | 10,000 |
| Total | 70,000 | |
| Less: | ||
| i. Administrative overhead under charged in financial account | 12,000 | |
| ii. Closing stock over valued in financial account | 9,000 | |
| iii. Dividend received not included in cost account | 15,000 | 36,000 |
| Net profit as per cost account | 34,000 |
10. 2073 Set D. Q.No. 22
The net profit as per financial account of a company is Rs. 90,000. On reconciliation of financial and cost account, the following information was disclosed:
i. Selling expenses overcharged in cost account: Rs. 10,000
ii. Store overvalued in financial account: Rs. 5,000
iii. Dividend paid shown in financial account: Rs. 20,000
iv. Interest on investment credited in financial account: Rs. 15,000
Required: Reconciliation statement of cost and financial account.
Solution: Reconciliation Statement between Cost and Financial Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 90,000 | |
| Add: | ||
| i. Dividend paid not included in cost account | 20,000 | 20,000 |
| Total | 1,10,000 | |
| Less: | ||
| i. Selling overhead overcharged in cost account | 10,000 | |
| ii. Store overvalued in financial account | 5,000 | |
| iii. Interest in investment not included in cost account | 15,000 | 30,000 |
| Net profit as per cost account | 80,000 |
11. 2072 Set C Q. No. 22
The net profit as per financial account is Rs. 60,000. Reconciling the cost account with the financial account, the following discrepancies were revealed:
i. Works overhead under recovered in cost account: Rs. 5,000.
ii. Office overhead over recovered in cost account: Rs. 3,000.
iii. Depreciation charged in financial account Rs. 5,000 and in cost account Rs. 6,000.
iv. Income tax paid: Rs. 15,000.
Required: Reconciliation statement of cost and financial account.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 60,000 | |
| Add: | ||
| i. Works overhead under recovered in cost account | 5,000 | |
| ii. Income tax not included in cost account | 15,000 | 20,000 |
| Total | 80,000 | |
| Less: | ||
| i. Office overhead over recovered in cost account | 3,000 | |
| ii. Depreciation under charged in financial account (6,000 – 5,000) | 1,000 | 4,000 |
| Net profit as per cost account | 76,000 |
12. 2072 Set D Q. No. 22
The net profit as shown by the financial account is Rs. 2,00,000. On reconciliation, the following details were ascertained:
i. Selling overheads were not recorded in the cost account: Rs. 20,000
ii. Closing stock: Cost account Rs. 50,000; Financial account Rs. 75,000
iii. Goodwill written off shown in financial account was Rs. 5,000
iv. Tax paid: Rs. 30,000
Required: Reconciliation statement of cost and financial account.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Profit as per financial account | 2,00,000 | |
| Add: | ||
| i. Selling overheads were not recorded on cost account | 20,000 | |
| ii. Goodwill written off not included in cost account | 5,000 | |
| iii. Income tax paid not included in cost account | 30,000 | 55,000 |
| Total | 2,55,000 | |
| Less: | ||
| i. Closing stock over valued in financial account (75,000 – 50,000) | 25,000 | 25,000 |
| Net profit as per cost account | 2,30,000 |
13. 2072 Set E Q. No. 22
The net profit as shown by the financial account is Rs. 90,000. On reconciliation, the following facts were disclosed:
i. Over valuation of closing stock in cost accounting: Rs. 20,000
ii. Depreciation overcharged in cost account: Rs. 10,000
iii. Factory overhead under charged in cost account: Rs. 15,000
iv. Interest from investment: Rs. 8,000
Required: Reconciliation statement of cost and financial account.
Solution: Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 90,000 | |
| Add: | ||
| i. Closing stock over valued in cost account | 20,000 | |
| ii. Factory overhead under charged in cost account | 15,000 | 35,000 |
| Total | 1,25,000 | |
| Less: | ||
| i. Depreciation overcharged in cost account | 10,000 | |
| ii. Interest in investment not included in cost account | 8,000 | 18,000 |
| Net profit as per cost account | 1,07,000 |
14. 2071 Supp Q.No. 22
The net profit as shown by the financial account of a company is Rs. 1,50,000. On reconciliation, the following facts were disclosed:
i. Work overheads under recovered in cost account: Rs. 10,000
ii. Tax paid: Rs. 20,000
iii. Opening stock under valuation in cost account: Rs. 5,000
iv. Dividend credited in financial account: Rs. 3,000
Required: Reconciliation statement of cost and financial account.
Solution: Reconciliation Statement between Cost and Financial Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 1,50,000 | |
| Add: | ||
| i. Work overhead under recorded in cost account | 10,000 | |
| ii. Tax paid not included in cost account | 20,000 | |
| iii. Opening stock under valued in cost account | 5,000 | 35,000 |
| Total | 1,85,000 | |
| Less: | ||
| i. Dividend credited in financial account | 3,000 | 3,000 |
| Net profit as per cost account | 1,82,000 |
15. 2070 Supp. Q.No. 22
The net profit as shown by the financial account of a company is Rs. 69,000. On reconciliation, the following facts were disclosed:
i. Factory overhead over absorbed in cost account: Rs. 800
ii. Administrative overhead under absorbed in cost account: Rs. 2,500
iii. Closing stock over evaluation in cost account: Rs. 3,800
iv. Selling overhead over absorbed in cost account: Rs. 6,500
Required: Reconciliation statement of cost and financial account.
Solution: Reconciliation Statement between Financial and Cost Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 69,000 | |
| Add: | ||
| i. Administrative overhead under absorbed in cost account | 2,500 | |
| ii. Closing stock over valuation in cost account | 3,800 | 6,300 |
| Total | 75,300 | |
| Less: | ||
| i. Factory overhead over absorbed in cost account | 800 | |
| ii. Selling overhead over absorbed in cost account | 6,500 | 7,300 |
| Net profit as per cost account | 68,000 |
16. 2070 Set C. Q.No. 22
The net profit as per financial account of a company is Rs. 1,30,000. On reconciliation of financial and cost account, the following facts were located:
i. Depreciation: On financial account Rs. 32,000; On cost account Rs. 40,000
ii. Administrative expenses: On financial account Rs. 45,000; On cost account Rs. 35,000
iii. Income tax paid shown in financial account: Rs. 7,000
iv. Interest on investment credited in financial account: Rs. 5,000
Required: Reconciliation statement of cost and financial accounts.
Solution: Reconciliation Statement between Cost and Financial Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 1,30,000 | |
| Add: | ||
| i. Administrative expenses over charged in financial a/c (45,000 – 35,000) | 10,000 | |
| ii. Income tax paid shown only in financial account | 7,000 | 17,000 |
| Total | 1,47,000 | |
| Less: | ||
| i. Depreciation under charged in financial account (40,000 – 32,000) | 8,000 | |
| ii. Interest on investment credited in financial account | 5,000 | 13,000 |
| Net profit as per cost account | 1,34,000 |
17. 2070 Set D. Q.No. 22
Problem: The net profit as per Financial Account of a company is Rs. 2,70,000. On reconciliation of Financial and Cost Account, the following information was disclosed: i. Depreciation overcharged in cost account: Rs. 13,000 ii. Administrative expenses under recovered in cost account: Rs. 15,000 iii. Bank interest credited in financial account: Rs. 10,000 iv. Payment of dividend shown in financial account: Rs. 25,000 Required: Reconciliation statement of financial account and cost account.
Reconciliation Statement between Cost and Financial Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 2,70,000 | |
| Add: | ||
| i. Administrative expenses under recovered in cost a/c | 15,000 | |
| ii. Dividend paid not included in cost account | 25,000 | 40,000 |
| Subtotal | 3,10,000 | |
| Less: | ||
| i. Depreciation overcharged in cost account | 13,000 | |
| ii. Bank interest credited in financial account | 10,000 | 23,000 |
| Net profit as per cost account | 2,87,000 |
18. 2069 Supp Set A Q.No. 22
Problem: The net profit of a company as per financial account was Rs. 70,000. On reconciling the cost and financial account, the following differences were noted: i. Factory overhead stated in cost account Rs. 70,000 and in financial account Rs. 80,000. ii. Dividend received recorded in financial account Rs. 16,000. iii. Administrative expenses undercharged in financial account Rs. 14,000. iv. Value of closing stock stated in financial account Rs. 30,000 and in cost account Rs. 12,000. Required: Reconciliation Statement of financial and cost accounting.
Reconciliation Statement between Cost and Financial Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 70,000 | |
| Add: | ||
| i. Factory overhead overcharged in financial account (80,000 – 70,000) | 10,000 | 10,000 |
| Subtotal | 80,000 | |
| Less: | ||
| i. Administrative overhead under charged in financial account | 14,000 | |
| ii. Dividend received not recorded in cost account | 16,000 | |
| iii. Closing stock over recorded in financial account (30,000 – 12,000) | 18,000 | 48,000 |
| Net profit as per cost account | 32,000 |
19. 2069 Supp Set B Q.No. 22
Problem: Following information is given: i. Net loss as per financial accounting Rs. 50,000. ii. Depreciation: Financial accounting Rs. 15,000; Cost accounting Rs. 20,000. iii. Administrative expenses under recorded in cost accounting Rs. 5,000. iv. Interest on loan Rs. 1,000 recorded in financial account. v. Profit on sale of machinery Rs. 5,000 recorded in financial account. Required: Reconciliation statement of cost and financial account.
Reconciliation Statement of Cost and Financial Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net loss as per financial account | (50,000) | |
| Add: | ||
| i. Administrative expenses under charged in cost account | 5,000 | |
| ii. Interest on loan recorded only in financial account | 1,000 | 6,000 |
| Subtotal | (44,000) | |
| Less: | ||
| i. Depreciation under charged in financial account (20,000 – 15,000) | 5,000 | |
| ii. Profit on sales of fixed assets only recorded in financial account | 5,000 | 10,000 |
| Net loss as per cost account | (54,000) |
A Complete NEB Solution Manual: PRINCIPLES OF ACCOUNTING Grade XII
20. 2069 [Set A] Q.No.22
On comparison of cost and financial accounts, the following differences were noticed: i. Net profit as per financial account Rs. 74,000 ii. Overvaluation of closing stock in cost account Rs. 15,000 iii. Works overhead over recorded in cost account Rs. 5,000 iv. Administrative overhead over recorded in financial account Rs. 10,000. v. Dividend recorded in financial account Rs. 6,000 vi. Bank interest debited in financial account Rs. 8,000 Required: Reconciliation statement between financial and cost account.
Reconciliation Statement between Financial and Cost Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 74,000 | |
| Add: | ||
| i. Overvaluation of closing stock in cost a/c | 15,000 | |
| ii. Administrative overhead over recorded in profit and loss a/c | 10,000 | |
| iii. Bank interest debited in financial a/c | 8,000 | |
| iv. Dividend recorded in financial account only | 6,000 | 39,000 |
| Total | 1,13,000 | |
| Less: | ||
| i. Works overhead over recorded in cost a/c | 5,000 | 5,000 |
| Net profit as per cost account | 1,08,000 |
Note: Dividend is considered as dividend paid.
21. 2069 (Set B) Q.No. 22
The net profit as shown by the financial account of a company is Rs. 1,50,000. On reconciliation, the following facts were disclosed: i. Factory overheads undercharged in cost account Rs. 20,000 ii. Office overheads undercharged in financial account Rs. 15,000 iii. Depreciation charged in financial account Rs. 6,000 and cost account Rs. 7,000 iv. Interest on investment credited in financial account Rs. 5,000 Required: Reconciliation statement between cost and financial account.
Reconciliation Statement between Cost and Financial Account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 1,50,000 | |
| Add: | ||
| i. Factory overhead undercharged in cost account | 20,000 | 20,000 |
| Total | 1,70,000 | |
| Less: | ||
| i. Office overhead undercharged in financial account | 15,000 | |
| ii. Depreciation undercharged in financial account (7,000 – 6,000) | 1,000 | |
| iii. Interest on investment credited in financial account but not shown in cost account | 5,000 | 21,000 |
| Net profit as per cost account | 1,49,000 |
22. 2068 Supp Q.No. 22
The net profit shown by financial account is Rs. 50,000. On verification, the following differences were notified: i. Office overhead shown by financial account was Rs. 70,000. But it was shown as Rs. 50,000 in cost account. ii. Depreciation undercharged in financial account Rs. 10,000. iii. Dividend received recorded in financial account Rs. 20,000. iv. Income tax of Rs. 40,000 is not recorded in cost account. Required: Reconciliation statement between financial and cost account.
Reconciliation statement between financial and cost account
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial account | 50,000 | |
| Add: | ||
| i. Office overhead overcharged in financial a/c (70,000 – 50,000) | 20,000 | |
| ii. Income tax not included in cost a/c | 40,000 | 60,000 |
| Total | 1,10,000 | |
| Less: | ||
| i. Depreciation undercharged in financial a/c | 10,000 | |
| ii. Dividend received recorded in financial a/c | 20,000 | 30,000 |
| Net profit as per cost a/c | 80,000 |
23. 2067 Supp Q.No. 22
The net profit shown by financial account is Rs. 60,000 while reconciling the cost and financial accounts the following facts were disclosed: i. Works overheads recovered in cost account Rs. 15,000 in financial account Rs. 5,000 ii. Dividend credited in financial account Rs. 6,000 iii. Depreciation charged in financial account Rs. 2,000 but Rs. 20,000 in cost account. iv. Income tax paid Rs. 5,000. v. Provision for bad debts in financial account Rs. 1,000. Required: Reconciliation statement of cost and financial account.
Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Net profit as per financial a/c | 60,000 | |
| Add: | ||
| i. Income tax paid not included in cost a/c | 5,000 | |
| ii. Provision for bad debt not included in cost a/c | 1,000 | 6,000 |
| Total | 66,000 | |
| Less: | ||
| i. Works overhead undercharged in profit and loss a/c (15,000 – 5,000) | 10,000 | |
| ii. Dividend received not included in cost a/c | 6,000 | |
| iii. Depreciation undercharged in financial a/c (20,000 – 2,000) | 18,000 | 34,000 |
| Net profit as per cost a/c | 32,000 |
24. 2066 Q.No. 22
The net profit as per financial account of a trader was Rs. 35,000. On reconciliation, the following differences were noticed: i. Factory overheads recorded in cost account Rs. 60,000 but debited in financial account Rs. 65,000. ii. Office and administrative overhead undercharged in financial accounting Rs. 7,000. iii. Dividend received recorded in financial accounting only Rs. 8,000. iv. Closing stock undervalued in cost accounting by Rs. 9,000. Required: Reconciliation statement between financial and cost accounting.
Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Profit as per financial account | 35,000 | |
| Add: | ||
| i. Factory overheads under absorbed in cost account (65,000 – 60,000) | 5,000 | 5,000 |
| Total | 40,000 | |
| Less: | ||
| ii. Office and administrative overheads undercharged in financial account | 7,000 | |
| iii. Dividend received recorded in financial account | 8,000 | |
| iv. Closing stock undervalued in cost account | 9,000 | 24,000 |
| Profit as per cost account | 16,000 |
25. 2065 Q.No. 22
The net profit as shown by the financial account of a company is Rs. 1,80,000. On the reconciliation following facts were disclosed: i. Works overhead over recovered in cost account by Rs. 25,000 ii. Administrative expenses under recovered in cost account by Rs. 15,000. iii. Bank interest credited in financial account by Rs. 4,500. iv. Depreciation undercharged in cost account Rs. 2,500. Required: Reconciliation statement of cost and financial account.
Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Profit as per financial account | 1,80,000 | |
| Add: | ||
| i. Administrative expenses under recovered in cost account | 15,000 | |
| ii. Depreciation undercharged in cost account | 2,500 | 17,500 |
| Total | 1,97,500 | |
| Less: | ||
| i. Works overhead over recovered in cost account | 25,000 | |
| ii. Bank interest credited in financial account | 4,500 | 29,500 |
| Net profit as per cost account | 1,68,000 |
26. 2064 Q.No 22
The net profit as per financial account was Rs. 42,000. On reconciliation, the following differences were noticed: i. Works overhead under recovered in cost account Rs. 6,000. ii. Interest charged in financial accounts Rs. 4,000 iii. Opening stock overvalued by financial account Rs. 10,000. iv. A profit of Rs. 5,000 on sales of fixed assets was shown in financial account. Required: Reconciliation between financial and cost account.
Cost Reconciliation Statement
| Particulars | Amount (Rs.) | Amount (Rs.) |
|---|---|---|
| Profit as per financial account | 42,000 | |
| Add: | ||
| i. Works overhead under recorded in cost a/c | 6,000 | |
| ii. Interest charged in financial a/c | 4,000 | |
| iii. Opening stock overvalued in financial account | 10,000 | 20,000 |
| Total | 62,000 | |
| Less: | ||
| i. Profit on sales of fixed assets not included in cost account | 5,000 | 5,000 |
| Net profit as per cost account | 57,000 |