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  • Comparing Departmental Trading Results for Improved Decision Making

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    Tan Shu Yuin
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    The document discusses: 1) The purposes of preparing departmental accounts which are to compare trading results between departments, control unprofitable departments, and aid in decision making such as whether to close or continue a department. 2) Key aspects of departmental accounts including the transfer of goods between departments and allocation of expenses between departments after adjusting for accrued and prepaid items. 3) A sample format for a departmental income statement showing sales, cost of goods sold, gross profit, expenses and net profit/loss for two departments and total.

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    Original Title

    Departmental format

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    The document discusses: 1) The purposes of preparing departmental accounts which are to compare trading results between departments, control unprofitable departments, and aid in decision making such as whether to close or continue a department. 2) Key aspects of departmental accounts including the transfer of goods between departments and allocation of expenses between departments after adjusting for accrued and prepaid items. 3) A sample format for a departmental income statement showing sales, cost of goods sold, gross profit, expenses and net profit/loss for two departments and total.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    504 views1 page

    Comparing Departmental Trading Results for Improved Decision Making

    Uploaded by

    Tan Shu Yuin
    The document discusses: 1) The purposes of preparing departmental accounts which are to compare trading results between departments, control unprofitable departments, and aid in decision making such as whether to close or continue a department. 2) Key aspects of departmental accounts including the transfer of goods between departments and allocation of expenses between departments after adjusting for accrued and prepaid items. 3) A sample format for a departmental income statement showing sales, cost of goods sold, gross profit, expenses and net profit/loss for two departments and total.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    Purpose / Reasons of preparing Departmental Accounts:

     Comparing trading results of each department (贡献：Manager rewards)


     Need to control unprofitable department
     Decision making (close off or continue)

    本章特点：
     Inter transfer of goods
     Allocation of expenses between department (先调整 Accrued/ Prepaid，再按比例平分)

    Format:

    Company XYZ
    Income Statement for the year ended 31 December 2014
    Departmental A Departmental B Total
    RM RM RM RM RM RM
    Sales × × ×
    Less: Sales Returns/ Returns Inwards × × ×
    Net Sales ×× ×× ××

    Less: Cost of Goods Sold


    Opening Stock × × ×
    Purchases × × ×
    Less: Returns Outwards x x x
    xx xx xx
    Add: Carriage Inwards （相关费用） x x x
    xx xx xx
    Inter Transfer of Goods × × ×
    × × ×
    Less: Closing Stock × × ×
    × × ×
    Gross profit (Gross Loss) ×× ×× ××

    Add: Income
    Discount Received × × ×
    ×× ×× ××
    Less: Expenses
    Rent and Rates / Water and Electricity × × ×
    Light and Power × × ×
    Insurance × × ×
    Depreciation of building × × ×
    Repairs and maintenance of building × × ×
    Wages and Salaries × × ×
    Sales Commission × × ×
    Delivery Expenses × × ×
    Advertising × × ×
    Administrative Expenses × × ×
    General Expenses × × ×
    x x ×
    Net Profit / (Net Loss) xx xx ××

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