What is Departmental Accounting? Give an example

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  • 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.


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  • Jun 18th, 2015

Departmental account is an account prepared for different departments in an organization. It is a department with each units or sections, which must account for sales and purchase made monthly quarterly or annually.

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Kajal Sharma

  • Aug 15th, 2015

A departmental accounting system is an accounting information system that records the activities and financial information about the department. Managers can use the financial information from the departmental accounting system to tell how profitable and efficient each department is.
Larger corporations cant be properly accounted for with one single, centralized accounting system. That is why the corporation is divided into many different departments like the shipping and receiving department, sales department, and manufacturing department. Many companies also departmentalize based on products. For instance, Microsoft has a Windows department, Xbox department, and Microsoft Office department.
Each one of these departments has its own accounting system to keep track of revenues and expenses. These accounting systems also provide useful efficiency ratios for management. Managers can use these ratios to evaluate the departments and consider merging departments or getting rid of some departments altogether.

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  • Aug 27th, 2015

What is Departmental Account?

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  • Sep 6th, 2015

The accounts are maintained in such manner which shows operating result of business. These have different rate of growth.

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