Reconciliation Statement Homework Help, Assignment Help, Online Tutor, Tutoring

Submit Assignment

* *

Payment Online Assignment Help

Cost Accounting

Homework Help

sfsf

Reconciliation Statement

The preparation of reconciliation statement involves the following steps:

1. Profit as per any set of books (cost or financial) may be taken as the base. This is as a matter of fact the starting point for determining the profit as shown by the other set of books after making suitable adjustments taking into consideration the causes of difference.

2. The effect of the particular cause of difference should be studied on the profits shown by the other set of books.

3. In case, the cause has resulted in an increase in the profit shown by other set of books, the amount of such increase should be added to the profit as per the former set of books which has been taken as the base.

4. In case, the cause has resulted in a decrease in the profit shown by other set of books, the amount of such decrease should be subtracted from the profit as per the former set of books which has been taken as the base.

Importance of reconciliation statement

In case separate set of books are maintained for costing and financial transactions, usually there will be a difference between profit shown by cost accounts and profit shown by financial accounts. However, it is also possible, per chance, that the overall profit shown by two sets of books is the same. Nevertheless all cases, the results shown by both the set of books are to be reconciled to identify the causes of difference (if any) and to establish accuracy of both the sets of books.