Departmental accounts

Which of the following companies is most likely to use a departmental accounting system.

• A small company

• a mid-sized company with only one product line

• A company that does not keep track of its financials on a computer

• A large company with many segments and divisions

The purpose of preparing a departmental profit and loss account for a firm is . . .

• to show the relative financial performance of different sections of the firm.

• to estimate the firm's.future cash requirements.

• to ensure that all likely bad debts are provided for.

• to ensure that discounts allowed by the firm do not exceed discounts received by it.

When preparing a departmental trading and profit and loss account, the best method of allocating expenses between departments is . . .

• to allocate expenses to each department in proportion to the sales of that department.

• to charge against each department those costs which are within its control.

• to allocate expenses to each department in proportion to the purchases of that department.

• None of the above.

In a departmental accounting system, net profit is calculated for each department.

• True

• False

The trading, profit and loss account is a company’s summary of the assets and liabilities on a specific date.

• True

• False

Which allocation method should be used for Rent expense?

• Sales

• Purchases

• Floor space

• Number of worker

Which allocation method should be used for Canteen Expenses?

• Sales

• Purchases

• Floor space

• Number of workers

Expenses which cannot be apportioned to department must be shown in the __________

• Balance Sheet

• Trading a/c

• Profit and Loss a/c

• Profit and loss appropriation a/c

Which of the following represents a direct expense?

• Administration

• Advertising

• Rent

• Salaries

Departmental Accounting facilitates

• comparison of trading results

• intelligent planning and control

• evaluating departmental performance

• all of the above