INTEGRATED & INTERLOCKING
SYSTEM
Muhammad Atif Khalil
INTEGRATED SYSTEM
An integrated system is one which
combines the cost accounting and
financial accounting functions in one
system of ledger accounts.
PRESENTATION TITLE 2
I
N S
T Y This gives a saving in terms of
time and cost. However, it has
E S the disadvantage of trying to
G T fulfil two purposes with one set
of ledger accounts despite the
R E differences between financial
A M accounting and management
accounting requirements
T
E
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D PRESENTATION TITLE
INTERLOCKING SYSTEM
An interlocking system has a separate
cost ledger for the cost accounting
function and a separate
financial ledger for the financial
accounting function.
PRESENTATION TITLE 4
I
N Although an interlocking
T system allows easier access to
E S cost accounting information, it
is more time consuming to
R Y prepare two sets of ledger
L S accounts and the two ledgers
O T will need reconciling on a
regular basis to ensure that
C E they agree .
K M The cost ledger and financial
I ledgers will each include a
control account .
N
G
10/9/2021 PRESENTATION TITLE
EDUCARE ACCA HUB
Which of the following statements is correct?
A An interlocking system is a single system for cost and financial
accounting
B In an integrated system there will be a financial ledger control account
C In an interlocking system there will be a cost ledger control account
D In an integrated system there are separate ledgers for cost and
financial accounting
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CASH,PAYABLE,RECIEVEABLE & CAPITAL
• In an interlocking system the cost account will only need to record
the transactions relating to cost and revenue of the business.
• Cash, Receivable, Payables and Capital are part of the financial
accounting so are ignored for costing purpose.
• To maintain full double entry, organisations will often have a cost
ledger control account instead of cash, receivables, payables &
capital.
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COST LEDGER CONTROL
ACCOUNT
An account in the cost ledger to record financial items
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PURCHASE OF INVENTORY
Dr store control account
Cr cost ledger control account
The amount recorded will be the net of sales tax invoice value taken
from supplier ’s invoice.
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ISSUANCE OF DIRECT MATERIAL
Dr work in progress control account
Cr store control account
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ISSUANCE OF INDIRECT MATERIAL
Dr production overhead control account
Cr store control account
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WAGES & SALARIES
Dr gross wages control account
Cr cost ledger control account
Analysis of wages
Dr WIP control account
Dr Production overhead control account
Dr Selling function
Dr Administration
Cr Gross wages control account
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OTHER EXPENSES
Dr Production overhead control account
Dr Selling function control account
Dr Administration control account
Cr Cost ledger control account
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EDUCARE ACCA HUB
Which of the following statements, relating to cost ledger accounting, are TRUE?
1 An integrated system is one where separate ledgers are kept for cost
accounting and management accounting.
2 An interlocking system is one where there is just one system of ledger
accounts for cost accounting and for management accounting.
A Both statements are correct
B Neither statement is correct
C Statement 1 is correct but statement 2 is incorrect
D Statement 2 is correct but statement 1 is incorrect
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EDUCARE ACCA HUB
Which of the following describes the cost ledger control account?
A An account which can be used to reconcile creditor (supplier) balances
B An account which can be used to reconcile debtor (customer) balances
C An account in the cost ledger to record financial items
D An account in the financial ledger to record costing items
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EDUCARE ACCA HUB
Which of the following statements about integrated accounts is/are correct?
(i) Integrated systems save time and administrative effort.
(ii) Integrated systems maintain two separate sets of accounts: one for
financial accounts and one for cost accounts.
(iii) Integrated systems avoid the need for periodic profit reconciliations.
A (i) only
B (i) and (ii)
C (i) and (iii)
D (ii) and (iii)
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EDUCARE ACCA HUB
A company's accounting system operates so that the cost accounts are
independent of the financial accounts. The two sets of accounts are
reconciled on a regular basis to keep them continuously in agreement.
What is this type of accounting system known as?
A Independent accounts
B Interlocking accounts
C Reconciled accounts
D Integrated accounts
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EDUCARE ACCA HUB
When materials are purchased on credit and an interlocking costing system
is in use what is the double entry for the purchase?
A Debit Materials control
Credit Payables
B Debit Materials control
Credit Cost ledger control
C Debit Payables
Credit Materials control
D Debit Cost ledger control
Credit Materials control
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EDUCARE ACCA HUB
Which of the following features are characteristic of an integrated
accounting system?
1 Management accounting and financial accounting ledger accounts are
held in the same ledger.
2 There are no individual ledger accounts for receivables or payables.
3 Transactions are coded for both financial accounting purposes and
management accounting purposes.
A 1 only
B 1 and 2 only
C 1 and 3 only
D 2 and 3 only
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EDUCARE ACCA HUB
Which of the following statements are correct?
1 In a system of interlocking accounts, financial accounts and management
accounts are recorded in the same ledger.
2 The number of errors in a computerised accounting system should be less
than if a manual accounting system is used.
3 Transactions should be recorded more quickly in a computerised accounting
system than in a manual accounting system.
A Statements 1 and 2 only are correct
B Statements 1 and 3 only are correct
C Statement 2 only is correct
D Statements 2 and 3 only are correct
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EDUCARE ACCA HUB
Integrated accounts application packages have a number of
advantages. Which of the following is not one of them?
A User-friendly, as the functions will be similar in each module
B Tailored to suit the requirements of the business
C Compatibility between the modules
D Efficiency, as there is no need to quit one application to access
another
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EDUCARE ACCA HUB
In an interlocking accounting system what would be the correct
double entry for the issue of direct materials from a warehouse?
A Dr Raw material inventory Cr Work in progress
B Dr Raw material inventory Cr Production overhead
C Dr Work in progress Cr Raw material inventory
D Dr Production overhead Cr Raw material inventory
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EDUCARE ACCA HUB
In an interlocking accounting system what would be the entry for the
issue of indirect material?
A Dr Raw material inventory Cr Work in progress
B Dr Raw material inventory Cr Production overhead
C Dr Work in progress Cr Raw material inventory
D Dr Production overhead Cr Raw material inventory
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EDUCARE ACCA HUB
The cost accounts of a business are kept separate from the financial accounts,
but the two sets of accounts are reconciled each period.
Which accounting system is being described?
A Cost control accounts
B Cost ledger accounts
C Integrated accounts
D Interlocking accounts
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EDUCARE ACCA HUB
In an interlocking accounting system what would be the entry for the issue of
indirect material?
A Debit Raw material inventory Credit Work in progress
B Debit Raw material inventory Credit Production overhead
C Debit Work in progress Credit Raw material inventory
D Debit Production overhead Credit Raw material inventory
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EDUCARE ACCA HUB
What is the double-entry, in an interlocking accounting system, for the
purchase of raw materials on credit?
Debit Credit
A Raw materials inventory Trade payables
B Trade payables Raw materials inventory
C Raw materials inventory Cost ledger control
D Cost ledger control Raw materials inventory
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EDUCARE ACCA HUB
What is the double entry for a purchase of goods on credit?
A Debit Payables
Credit Materials control
B Debit Receivables
Credit Materials control
C Debit Materials control
Credit Payables
D Debit Materials control
Credit Receivables
28
EDUCARE ACCA HUB
What is the double entry for materials returned to a supplier which had been
purchased on credit?
A Debit Payables
Credit Materials control
B Debit Receivables
Credit Materials control
C Debit Materials control
Credit Payables
D Debit Materials control
Credit Receivables
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PRIMARY GOALS
Annual revenue growth
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THANK YOU
EDUCARE ACCA HUB
MUHAMMAD ATIF
KHALIL