- In the interlocking accounts, there is no double entry connection between the cost and financial accounts
- The cost and financial accounts are operated separately hence there are two profit figures which is the financial profit and the cost profit
- the differences in item (2) are caused among others, by differences in stock valuation and in the method of depreciation used
- as both cost and financial transaction originated from the same transactions, there must be only one profit figure, hence the two profit figures MUST BE RECONCILED
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