When the Cost Ledger Accounting system is adopted in an organizations the results shown by the accounting records i.e. financial accounting and cost ledger accounting differ from each other. Hence, it becomes necessary to reconcile the profit or loss shown by the two sets of records.
Need for Reconciliation
- It is necessary to find out the reasons for the differences in the profitability of both the records.
- Reconciliation enables to test the reliability of cost accounts. Costing figures in total should agree with the financial records.
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