Departmental Accounts | Jamb(UTME) Principles of Accounts
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We have the best interest of UTME candidate at heart that is why poscholars team pooled out resources, exerted
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In this post, we have enumerated a good number of points from the topic Departmental Accounts which was extracted
from the Jamb syllabus. I would advice you pay attention to each of the point knowing and understanding them by heart.
Happy learning.
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Objectives of Departmental Accounts
- To determine the profitability of each department.
- To monitor department-specific performance.
- To allocate resources more effectively.
- To control departmental expenses.
- To assist in pricing and budgeting decisions.
- To compare actual results with departmental budgets.
- To provide accountability for department managers.
- To identify loss-making departments early.
- To improve cost control across the organization.
- To assist in decisions about expansion or closure of departments.
- To enhance internal reporting.
- To motivate department heads by making performance visible.
- To calculate department-specific tax liabilities, if applicable.
- To track sales and cost trends by department.
- To support external reporting where required.
- To enable profit-sharing schemes based on departmental results.
- To assist in the evaluation of marketing strategies.
- To improve customer service by understanding department profitability.
- To benchmark performance between departments.
- To aid in investment decisions concerning specific departments.
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Apportionment of Expenses
- Apportionment ensures fair allocation of shared costs.
- Rent is apportioned based on floor area.
- Utility costs are apportioned based on meter readings.
- Salaries are apportioned based on time spent per department.
- Advertising is apportioned based on departmental sales.
- Insurance costs are apportioned according to asset values.
- Repairs and maintenance costs are apportioned based on usage.
- Depreciation is apportioned according to asset allocation.
- Administrative expenses are apportioned by headcount.
- Delivery and distribution costs are apportioned based on volume or weight.
- Security costs are apportioned by department size or risk profile.
- Telephone expenses are apportioned based on usage.
- Cleaning expenses are apportioned by area cleaned.
- Marketing expenses are apportioned by sales contribution.
- IT support costs are apportioned by number of devices used.
- Waste disposal is apportioned based on department output.
- Training expenses are apportioned by staff count.
- Bank charges are apportioned according to transaction volume.
- Legal fees are apportioned by department benefit.
- License fees are apportioned by department relevance.
- Apportionment improves accuracy of departmental profit calculations.
- Fair allocation boosts department accountability.
- Accurate apportionment supports strategic decision-making.
- Consistency in apportionment aids comparability over time.
- Documentation supports fair apportionment practices.
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Departmental Trading and Profit & Loss Account
- Each department maintains its own trading account.
- Departmental trading accounts record sales and cost of goods sold.
- Opening stock is recorded department-wise.
- Purchases are allocated to respective departments.
- Closing stock is valued per department.
- Gross profit is calculated for each department.
- Gross profit = Sales - Cost of Goods Sold (departmental).
- Direct expenses are charged directly to departments.
- Indirect expenses are apportioned appropriately.
- Departmental gross profit feeds into the P&L account.
- The departmental P&L includes allocated indirect costs.
- Net profit is determined per department.
- Inter-departmental transfers are adjusted in accounts.
- Departmental accounts aid in internal performance review.
- Returns inwards and outwards are recorded department-wise.
- Expenses specific to departments appear under direct costs.
- Profit margins can be compared across departments.
- Departmental accounts aid budgeting accuracy.
- Loss-making departments are identified quickly.
- Non-operating incomes are allocated per department where applicable.
- Cost of goods sold includes opening stock + purchases - closing stock.
- Departmental P&L accounts support tax calculations.
- Balance sheet assets and liabilities may be department-specific.
- Internal control is strengthened through departmental accounting.
- Variances between expected and actual profits are analyzed.
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Determining Departmental Income
- Sales revenue is recorded by department.
- Discounts allowed are deducted from departmental sales.
- Department-specific commissions are included as income.
- Interest income may be allocated by department.
- Departmental service fees contribute to income.
- Departmental returns reduce departmental sales.
- Rental income from departmental assets is recorded.
- Non-operating income is allocated where relevant.
- Departmental subsidies or grants are included.
- Sales data must be accurately recorded per department.
- Departmental promotions affect income figures.
- Seasonal fluctuations influence departmental income.
- Income from internal transfers is excluded.
- Consistency is vital in departmental income recognition.
- Cross-departmental projects need proper income allocation.
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Determining Departmental Expenses
- Direct materials used are allocated to departments.
- Direct labor costs are allocated by department.
- Depreciation is charged based on departmental assets.
- Rent and utilities are apportioned department-wise.
- Insurance expenses are allocated as per department asset value.
- Marketing costs are assigned by sales contribution.
- Distribution costs are allocated based on delivery volume.
- Department-specific administrative costs are recorded directly.
- Shared services are apportioned across departments.
- Repairs and maintenance are department-specific.
- Staff training costs are assigned per department.
- Bad debts are attributed to responsible departments.
- IT and communication costs are apportioned accordingly.
- Travel expenses are department-specific.
- Legal and professional fees are allocated by department benefit.
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I recommend you check my article on the following:
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- Jamb Principles of Accounts - Key Points and Summaries on 'Branch Accounts' for UTME Candidates
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This is all we can take on "Jamb Principles of Accounts - Key Points and Summaries on Departmental Accounts for UTME candidates"
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