Departmental Accounts and Interdepartmental Transfer: Calculating Stock Reserve

The video tutorial covers the preparation of departmental trading and profit and loss accounts for Zoona Enterprises. It explains the concept of inter-department transfers and the calculation of unrealized profit and stock reserve. The tutorial also details the allocation of administrative and general expenses and concludes with final calculations and a summary of the accounts.

What is the primary focus of the fourth question discussed in the video?

• Determining the cost of goods sold

• Allocating administrative expenses

• Understanding inter-department transfers and unrealized profit

• Calculating net profit for the year

What is the ratio used to allocate administrative expenses between departments X and Y?

• 1:4

• 4:2

• 2:3

• 3:1

How are goods transferred between departments X and Y priced?

• At market price

• 25% above cost

• At cost

• 50% above cost

What is the purpose of calculating a stock reserve?

• To eliminate unrealized profit from departmental accounts

• To calculate the cost of goods sold

• To allocate expenses

• To determine the total sales

In the context of the video, what does 'loading' refer to?

• The administrative expenses

• The cost of goods

• The total sales value

• The profit margin added to the cost

What happens if goods transferred between departments are not sold by the receiving department?

• The transferring department earns profit

• No profit is realized by the company

• The receiving department earns profit

• The company earns profit

Where should the stock reserve be recorded according to the video?

• In the general profit and loss account

• In the cash flow statement

• In the departmental trading account

• In the balance sheet

What is the final step in finalizing the accounts as discussed in the video?

• Reversing unrealized profit

• Allocating administrative expenses

• Calculating gross profit

• Transferring net profit to the balance sheet

Why is it important to calculate stock reserve when goods are transferred at invoice price?

• To prevent double counting of expenses

• To remove unrealized profit from the company's accounts

• To ensure accurate sales figures

• To allocate costs correctly

What should be done if there is an opening stock in the receiving department?

• Add it to closing stock

• Calculate opening stock reserve

• Allocate it to administrative expenses

• Ignore it