CA Inter P4 · Chapter 7 · Question 2 of 8
Profit as per cost accounts is ₹4,20,000. The following differences are noted: (i) factory overheads over-absorbed in cost accounts ₹18,000; (ii) dividend received, recorded only in financial accounts ₹12,000; (iii) notional rent of own premises charged only in cost accounts ₹30,000; (iv) depreciation charged in financial accounts exceeds that in cost accounts by ₹25,000. Profit as per financial accounts is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) ₹4,55,000
Explanation
Start with cost profit ₹4,20,000. Over-absorbed overheads mean cost accounts charged more than actual, so add ₹18,000. Dividend is income only in financial accounts: add ₹12,000. Notional rent reduced cost profit only: add ₹30,000. Extra depreciation reduces financial profit: deduct ₹25,000. Financial profit = 4,20,000 + 18,000 + 12,000 + 30,000 - 25,000 = ₹4,55,000.
More Cost Accounting Systems MCQs
- Q4Under an integrated accounting system, the journal entry for direct material issued to production is:
- Q5The entry to record factory overheads absorbed into production in the cost ledger is:
- Q6Which of the following items appears only in the financial accounts and not in the cost accounts?
- Q7Profit as per financial accounts is ₹2,85,000. Factory overheads were under-absorbed in cost accounts by ₹14,000, administration overheads…
- Q8A major advantage of an integrated accounting system over a non-integrated system is that: