Preparing Departmental Trading and Profit and Loss Account

The video tutorial covers the preparation of departmental trading and profit and loss accounts. It begins with an introduction to departmental accounts and a review of previously covered topics. The instructor provides detailed information on departmental data, revenue items, and additional adjustments. The tutorial explains how to allocate expenses across departments using various ratios and offers working notes and calculations. The video concludes with final steps and tips for completing the accounts.

What is the primary purpose of departmental accounts?

• To calculate the overall profit of the company

• To manage inventory levels

• To allocate resources equally among departments

• To track the performance of individual departments

On what basis is advertisement expense typically allocated among departments?

• Value of machinery

• Electricity consumption

• Sales ratio

• Floor space occupied

Which of the following is NOT a direct item in the departmental trading account?

• Sales

• Salaries

• Purchases

• Opening stock

How is the salary of a salesman working in multiple departments typically allocated?

• Based on the number of hours worked in each department

• Equally among the departments

• Based on the sales generated by each department

• Not allocated, charged to a general account

What is the basis for allocating electricity expenses among departments?

• Units consumed

• Floor space occupied

• Sales ratio

• Value of machinery

Which ratio is used to allocate carriage inwards?

• Sales ratio

• Purchase ratio

• Floor space ratio

• Electricity consumption ratio

What is the first step in preparing departmental accounts?

• Listing direct items like opening stock and sales

• Calculating net profit

• Allocating expenses

• Preparing working notes for ratios

How is provision for bad debts calculated?

• As a percentage of sales

• As a percentage of daters

• As a fixed amount per department

• Based on the previous year's bad debts

What is the significance of preparing a total column in departmental accounts?

• It helps in allocating expenses more accurately

• It provides a better presentation of the solution

• It simplifies the calculation of net profit

• It is mandatory for all financial statements

What should be done if no specific allocation basis is provided for an expense?

• Charge it to a general account

• Allocate equally among all departments

• Use a logical basis related to the nature of the expense

• Exclude it from the accounts