Non-Integrated Accounting System is a method where financial accounting and cost accounting are maintained in two separate sets of books. Financial records are kept for external statutory reporting, while cost records are kept for internal cost control and decision-making. The two systems operate independently, and reconciliation between financial profit and cost profit is periodically required.
Key Features:
- Maintaining Separate Books of Accounts for financial and cost records.
- Using Cost Ledger Control Account to link cost ledger with financial accounts.
- Independent Recording of financial and cost transactions.
- Mandatory Reconciliation between cost and financial profit figures.
- Detailed preparation of Cost Statements, Cost Sheets, and Cost Reports
Example Journal Entries:
| Transaction | Financial Books Entry | Cost Books Entry | ||
| Purchase of Raw Material | Purchase A/c To Creditors A/c |
Dr | Stores Ledger Control A/c To Cost Ledger Control A/c |
Dr |
| Material Issued to Production | ❌ (No separate entry) | Work-in-Progress Control A/c To Stores Ledger Control A/c |
Dr | |
| Payment of Wages | Wages A/c To Bank A/c |
Dr | Wages Control A/c To Cost Ledger Control A/c |
Dr |
| Overheads Incurred | Factory Overhead A/c To Bank A/c |
Dr | Factory Overhead Control A/c To Cost Ledger Control A/c |
Dr |
| Overheads Absorbed | ❌ (Already booked) | Work-in-Progress Control A/c To Factory Overhead Control A/c |
Dr | |
(❌ Means no duplicate entry in financial books.)