Question

3.(a) Which business organisations have the need to prepare departmental accounts?
(b) State two reasons for preparing departmental accounts.
(c) State two ways in which the following incomes and expenses are apportioned in the departmental accounts: (i) discount allowed; (ii) discount received; (iii) rent and rates; (iv) depreciation; (v) canteen expenses; (vi) electricity; (vii) advertising; (viii) bad debts.

Accepted Answer

(a) Organisations that need departmental accounts: insurance companies; chartered accountant firms; service stations that sell PMS, kerosene and diesel oil (multi-product/department retailers).
(b) Reasons: to evaluate the performance of each department; to encourage competition among departments.
(c) Basis of apportionment: Discount allowed — Sales; Discount received — Purchases; Rat/rent and rates — space occupied; Staff related costs — number of employees; Depreciation — net book value of asset; Canteen expenses — number of employees; Electricity — space occupied; Advertising — sales; Bad debts — credit sales.

WAEC Accounting 2018 Theory — Question 3

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