INTRODUCTION TO DEPARTMENTAL ACCOUNT
These are accounts relating to the departments or division of a business which desire to have a separate result of each department to ascertain the strength or weakness of individual departments.
ADVANTAGES OF DEPARTMENTAL ACCOUNT
A. NEEDS AND PURPOSES OF DEPARTMENTAL ACCOUNT:
- To determine the trading result of each departments.
- To compare the performance of each department to identify the weak and strong division.
- To help the proprietor formulate policy
- It is easier to separate the operation because it show which department has most profit
- Errors can be easily detected.
- Helps to reward or reprimand departmental manager based on result.
- To ascertain the contributions of each department to the overall profit or loss
- Provide information for the remuneration of the departmental manager based on result
- Help in monitoring the progress of each department
- Gross profit of each department can easily be obtained
B. ALLOCATION OF EXPENSES:
1. Expenses incurred for one department: Any expense specifically incurred on behalf of department will be charged to that particular department
2.
You are viewing an excerpt of this lesson. Subscribing to the subject will give you access to the following:
- NEW: Download the entire term's content in MS Word document format (1-year plan only)
- The complete lesson note and evaluation questions for this topic
- The complete lessons for the subject and class (First Term, Second Term & Third Term)
- Media-rich, interactive and gamified content
- End-of-lesson objective questions with detailed explanations to force mastery of content
- Simulated termly preparatory examination questions
- Discussion boards on all lessons and subjects
- Guaranteed learning