What is Departmental Accounting? Give an example

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vasudeo007

  • Aug 31st, 2008
 

Departmental accounting is not a norm as far as I know.

It is so because, each department does not need to calculate its profits or losses.

In case where the company needs any department or a set of departments to work in such manner where their profit/loss contribution in company's totals would make a difference, the company form Strategic Business Unit.

The idea of departmental accounting is that each department is getting an input from some other department and they process the input to provide an output and that output will be input for the other some process.

Example: In a car factory- the department which collects all steel and moulds the same into car bodies has its own accounts books. And the department that does the wiring part also has its own accounts books. So on and so forth.

Hope the answer is correct.

Vasudeo.

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