If there is a difference in the results shown by the cost accounts and financial accounts, then only a cost reconciliation statement is prepared to reconcile their results by removing their differences.
A cost reconciliation statement is prepared on the same footing on which a bank reconciliation statement is prepared. The preparation of cost reconciliation statement involves the following steps:
Step 1: Start with profit or loss shown by any one set of accounts ( profit or loss as per cost accounts or financial accounts) as the base
A cost reconciliation statement is prepared on the same footing on which a bank reconciliation statement is prepared. The preparation of cost reconciliation statement involves the following steps:
Step 1: Start with profit or loss shown by any one set of accounts ( profit or loss as per cost accounts or financial accounts) as the base
Step 2: Find out the reason of difference of profit between cost and financial account
( You are requested to refer above post 'Causes or reasons of difference in profits')
Step 3: Determine the addition or subtract (less) items
Step 4: Prepare cost reconciliation statement
Specimen Of Cost Reconciliation Statement
Taking the profit as per cost account or loss of financial account
Particulars...........................................................................................Amount
Profit as per cost account or loss as per financial account...................XXX
Add:
i. Overcharge of expenses in cost account............................................XXX
ii. Items of expenses recorded only in cost account...............................XXX
iii. Items of income recorded only in financial account...........................XXX
iv. Amount of understated income in cost account.................................XXX
v. Over-valuation of opening stock in cost account.................................XXX
Vi. Under valuation of closing stock in cost account................................XXX
Less:
i. Under charge of expenses in cost account..........................................(XXX)
ii. Items of expenses recorded only in financial account........................(XXX)
iii. Income shown in cost account, but not in financial account..............(XXX)
iv. Amount of income over state in cost account.....................................(XXX)
v. Under valuation of opening stock in cost account...............................(XXX)
vi. Over valuation of closing stock in cost account...................................(XXX)
Profit as per financial account or loss as per cost account......................XXX