METHODS OF DEPARTMENTAL ACCOUNTING

METHODS OF DEPARTMENTAL ACCOUNTING
There are two methods of keeping departmental accounts: 

 Accounts of all departments are kept in one book only
To prepare such accounts, it will be necessary first, for the income and expenditure of department to be separately recorded in subsidiary books and then for them to be accumulated under separate heads in a ledger or ledgers. This may be done by having columnar subsidiary books and a columnar ledger.

 Separate set of books are kept for each department
A separate set of books may be kept for each department, including complete stock accounts of goods received from or transferred to other departments or as also sales.

Nevertheless, even when separate sets of books are maintained for different departments, it will also be necessary to devise a basis for allocation of common expenses among the different departments, if an organisation is interested in determining the separate departmental net profit in addition to the gross profit.