A manufacturing concern reported a net loss of 4,20,000 as per the Cost Accounts for the year ended 31 st March, 2026. Upon scrutiny of both sets of…

CA Intermediate · Cost and Management Accounting · PYQS · May 2026
A manufacturing concern reported a net loss of 4,20,000 as per the Cost Accounts for the year ended 31 st March, 2026. Upon scrutiny of both sets of accounts, the following differences were identified: Sr. No. Particulars Amount (₹) (i) Profit on sale of investments (Financial Accounts only) 55,000 (ii) Factory overheads under-absorbed in Cost Accounts 70,000 (iii) Discount allowed to customers (Financial Accounts only) 30,000 (iv) Depreciation overcharged in Cost Accounts 90,000 (v) Selling overheads over-absorbed in Cost Accounts 65,000 (vi) Bad debts written-off (Financial Accounts only) 1,10,000 (vii) Over-valuation of closing stock in Cost Accounts 40,000 You are required to: (i) Prepare a Reconciliation Statement. (ii) Ascertain the net profit / (loss) as per the Financial Accounts.

Suggested Answer and Working Notes:

(c) Reconciliation Statement Particulars Amount (₹) Amount (₹) Net Loss as per Cost Accounts 4,20,000 Add: Profit on sale of investments 55,000 Depreciation overcharged in Cost Accounts 90,000 Selling overheads over-absorbed in Cost Accounts 65,000 2,10,000 2,10,000 Less: Factory overheads under-absorbed in Cost Accounts 70,000 Discount allowed to customers 30,000 Bad debts written-off 1,10,000 Over-valuation of closing stock in Cost Accounts 40,000 2,50,000 Net Loss as per Financial Accounts 4,60,000

Topics: Cost Accounting Systems

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