INTEGRAL & NON-INTEGRAL ACCOUNTS

1. Basics of Cost Accounting
Unit 5 Cost Accounting
Systems
Integral & Non Integral
Accounts

2. Non - Integral Accounts
▪ It is a system where financial & Cost records are
maintained separately.
▪ Here Balance Sheet Items are not to be included.
(Cash / Bank, Debtors & Creditors & Fixed
Assets). So an account called as Cost Ledger
Control A/c (or) General Ledger Adjustment A/c
is created to include the effects of the above
mentioned accounts in the Non Integral
accounts.

3. Non - Integral Accounts
▪ Accounts maintained under Non Integral Accounts:
1. Cost Ledger Control A/c: It is created to complete
Double entry of impersonal accounts (Nominal
Accounts). Debit – Sales, Credit – All Nominal
Accounts (Overheads), Balancing Figure – Net
Profit (Cr.) / Loss (Dr.) transferred to Costing P&L /
Balance c/d (Based on Company's Policy).
2. Stores Ledger Control A/c: It shows the total value
of stock available in all the stores. Debit – Cost
ledger Control A/c (Purchase of material), Credit –
Work in Process A/c (Direct Material) / Respective
Overhead A/c* (Indirect Material), Abnormal Losses
/ Gains - transferred to Costing P&L, Balancing
Figure – Value of stores.

4. Non - Integral Accounts
3. Wages Control A/c: Debit – Total Wages, Credit –
Respective Overhead A/c*
Direct Wages – Work in Process Control A/c
Indirect Wages – *Production Overheads Control A/c /
Administration Overheads A/c / Selling & Distribution
Overheads A/c based on usage
Abnormal Items – Costing P&L / Balance c/d (Based on
Company's Policy).
4. Production Overhead A/c: Debit – Stores Control /
Wages Control A/c, Credit – Work in Process A/c
(Overheads Recovered), Balancing Figure – Cost
Ledger Control A/c / Costing P&L A/c (under / over
absorption) or (Abnormal Profit / Loss) / Balance
c/d (Based on Company's Policy)

5. Non - Integral Accounts
5. Administration Overhead A/c: Debit – Stores
Control / Wages Control A/c, Credit – Finished
Goods Control A/c (Overheads Recovered),
Balancing Figure – Cost Ledger Control A/c /
Costing P&L A/c (under / over absorption Debit
/ Credit respectively) or (Abnormal Profit / Loss)
/ Balance c/d (Based on Company's Policy)
6. Selling & Distribution Overhead A/c: Debit –
Stores Control / Wages Control A/c, Credit –
Cost of Sales A/c (Overheads Recovered),
Balancing Figure – Cost Ledger Control A/c /
Costing P&L A/c (under / over absorption Debit
/ Credit respectively) or (Abnormal Profit / Loss)
/ Balance c/d (Based on Company's Policy)

6. Non - Integral Accounts
7. Work in Process Control A/c: Debit – Stores &
Wages Control A/c (Direct) & Production
Overheads Control A/c, Credit – Finished
Goods A/c, Balancing Figure: Cost Ledger
Control A/c / Costing P&L (Abnormal Profit /
Loss) / Balance c/d (Based on Company's
Policy)
8. Finished Goods Control A/c: Debit – Work in
Process Control A/c, Credit – Cost of Sales A/c,
Balancing Figure: Value of Closing Stock
9. Cost of Sales A/c: Debit – Finished Goods
Control A/c, Administration Overhead Control
A/c & Selling & Distribution Overhead Control
A/c, Credit – Costing P&L.

7. Non - Integral Accounts
10.Costing P&L: Debit – All above mentioned
Overhead items (if company’s policy), all
abnormal losses, Credit – All Abnormal Gains,
Cost Ledger Control a/c, Balancing figure –
Profit / Loss (Cost Ledger A/c)

8. Need for Reconciliation of Non -
Integral Accounts
▪ Since 2 different set of accounting records are
maintained, there is a possibility of difference
between the Profit as per Financial Records &
Cost Records.
▪ To find the reasons of difference, a reconciliation
statement is prepared as under:

9. Reconciliation of Non - Integral
Accounts
Particulars ₹ Particulars ₹
Under absorption of
Overheads
xx Profit as per Cost Records xx
Expenses specific to
financial accounts* (Ex –
Loss due to Flood)
xx Incomes specific to financial
accounts** (Ex- Insurance
claim due to loss of stock)
xx
Profit as per Financial
Records (b/f)
xx Over absorption of
Overheads & Expenses of
Cost accounts only
xx
Total xx Total xx
*Non Operating Expenses are Expenses not incurred in
normal business activities. Ex – Interest on loan
*Non Operating Incomes are incomes not earned in normal
business activities. Ex – Sale of Investment

10. Integral Accounts
▪ Here both financial & cost records are maintained
together which eliminates need for preparing
Cost Ledger Control A/c. Therefore Operating
Profit before Interest on loan is the Profit from
Cost Records.
▪ Benefits of Integral Accounts:
1. No need for reconciliation
2. Lesser cost & efforts involved
3. Less Time Consuming