Departmental Account: Trading and P&L Account and General P&L Account

The video tutorial covers the preparation of departmental trading and profit and loss accounts, along with a general profit and loss account for Diva Corporation. It explains the allocation of expenses and adjustments, such as prepaid advertising and outstanding rent, across two departments: books and stationery. The tutorial also discusses the importance of working notes and the allocation of common expenses to the general PNL account.

What is the primary purpose of dividing a business into departments for accounting?

• To increase sales

• To simplify tax calculations

• To allocate expenses and income accurately

• To reduce the number of employees

What is the new concept introduced in question #2 compared to question #1?

• Departmental trading account

• Balance sheet preparation

• Cash flow statement

• General profit and loss account

How are advertising expenses allocated if no specific basis is provided?

• Based on the number of employees

• Equally between departments

• In the ratio of sales

• In the ratio of purchases

Which department should bear the book delivery wages?

• General expenses

• Stationery department

• Both departments equally

• Book department

Where should interest on a bank loan be recorded if it is not department-specific?

• In the book department's PNL account

• In the stationery department's PNL account

• In the general PNL account

• In the balance sheet

How is lighting expense typically allocated between departments?

• In the ratio of area occupied

• In the ratio of sales

• Based on the number of employees

• Equally between departments

What is the second effect of closing stock in accounting?

• It is recorded in the profit and loss account

• It is recorded in the balance sheet as an asset

• It is recorded as a liability

• It is ignored in final accounts

What is the significance of working notes in accounting problems?

• They help in understanding the allocation of expenses

• They are used only for tax calculations

• They are optional and can be skipped

• They are used to calculate employee salaries

What is the final step after calculating the net profit for departments?

• Ignoring it in the final accounts

• Transferring it to the balance sheet

• Distributing it among employees

• Reinvesting it in the business

Which of the following is not a typical adjustment in departmental accounts?

• Prepaid expenses

• Outstanding expenses

• Employee bonuses

• Depreciation