# Integrated (Integral) Accounting System

The Integrated Accounting System keeps cost and financial accounts together in one single set of books. There is no separate cost ledger and no separate financial ledger — one set serves both purposes.

## What It Provides

It fully meets the information requirements of both Cost Accounting and Financial Accounting from a single source.
It supplies the data needed to prepare the Profit & Loss Account and Balance Sheet as required by law.
It supports effective control over assets and liabilities of the business, because real accounts (debtors, creditors, fixed assets, cash) are kept within the same system.

## Relationship to the Non-Integrated System

The integrated system is best learned as a small modification of the non-integrated system:

Feature	Non-Integrated	Integrated
Ledger accounts maintained	Same list	Same list…
The 'link' account	General Ledger Adjustment A/c	…except the actual financial account itself
Journal entries	Standard cost entries	Same entries, but the respective financial A/c is debited/credited instead of GLA

So the rule is simple:

> Wherever the non-integrated system used the General Ledger Adjustment A/c, the integrated system uses the real financial account instead (e.g. Creditors, Bank, Debtors).

Because real accounts are now inside the books, the two-profits problem disappears — there is only one profit figure, so no reconciliation is required.

## Key Takeaway

One set of books → one profit → no reconciliation. To convert a non-integrated entry into an integrated one, just replace the GLA A/c with the specific financial account that the transaction actually involves.

Worked example

### Example 1

Same transaction, two systems — purchase of materials on credit (₹50,000).

Non-Integrated:

```

Stores Ledger Control A/c Dr 50,000

To General Ledger Adjustment A/c 50,000

```

Integrated: the GLA is replaced by the real creditor account —

```

Stores Ledger Control A/c Dr 50,000

To Creditors / Sundry Creditors A/c 50,000

```

Everything internal to costing (issue to WIP, completion, cost of sales) is recorded identically in both systems.

⚠️ Common exam mistakes

Asking for a reconciliation under the integrated system. Because there is only one set of books and one profit, reconciliation does not arise.
Thinking the list of ledger accounts is different. It is the same list as the non-integrated system — only the GLA A/c is swapped for actual financial accounts.
Still routing entries through the General Ledger Adjustment A/c. Under the integrated system the GLA A/c is replaced by the relevant real account (Bank, Creditors, Debtors, etc.).

Reference:

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