Departmental and Branch Accounts Alıştırma Soruları — JAMB UTME — Sayfa 2

Soru 21Soru →

Match each of the following departmental overhead expenses with its standard equitable basis of apportionment in departmental accounting:

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Cevap

Factory power matches with Kilowatt-hours/horse-power rating; Staff canteen expenses match with Number of employees; Rent, rates, and building insurance match with Floor space occupied; Sales promotion matches with Gross sales/net turnover.

Each indirect expense in departmental accounting must be apportioned using a logical, equitable basis that reflects benefit received or cost driven. Factory power relates to machine capacity (Kilowatt-hours/horse-power rating), staff canteen relates to headcount (Number of employees), rent and rates relate to physical location (Floor space occupied), and sales promotion relates to commercial activity (Gross sales or net turnover).

Adım Adım Çözüm

1

Identify the cause or driving factor for factory power usage.

Machine capacity/consumption (Kilowatt-hours or horse-power rating) is the equitable basis.

Heavy machinery power consumption is proportional to machine operational capacity rather than floor area or employee count.

2

Determine the appropriate basis for employee welfare and staff canteen expenses.

Number of employees / staff count per department is the equitable basis.

Canteen services are consumed by staff, so costs vary directly with departmental headcount.

3

Identify the property-related driver for rent, rates, and building insurance.

Floor space occupied by each department is the equitable basis.

Building expenses are distributed based on the proportion of physical area utilized by each department.

4

Select the revenue-generating basis for sales promotion and advertising.

Gross sales or net turnover of each department is the equitable basis.

Advertising expenses are intended to boost sales across selling departments, making departmental sales turnover the standard metric for apportionment.

Anahtar Kavram

Equitable Bases for Departmental Expense Apportionment

Soru 22Soru →

Heritage Media Group operates four distinct operational divisions within the same commercial premises: Book Publishing, Digital Printing, Commercial Stationery, and Periodicals. Below are four managerial situations faced by the executive board alongside four primary objectives of departmental accounting. Match each managerial situation on the left with its corresponding primary objective of departmental accounting on the right.

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Cevap

The correct pairing links each business situation to its underlying accounting objective: segment continuation or closure decisions match ascertaining segment profitability; calculating manager bonuses matches evaluating leadership performance; allocating shared facility costs matches apportioning overhead expenses; and analyzing gross margin variances matches monitoring operational efficiency.

Departmental accounts are prepared primarily for internal management control within a multi-segment business. By breaking down revenues, direct costs, and apportioned overheads by department, management can evaluate individual segment profitability for expansion or closure decisions, measure departmental managerial efficiency to base incentive rewards, apportion common expenses fairly, and monitor operational cost control.

Adım Adım Çözüm

1

Analyze the strategic decision regarding segment continuation or shutdown.

Pair the decision to close or expand the Digital Printing unit with ascertaining segment profitability.

Departmental trading and profit & loss accounts reveal which units add value and which drain enterprise resources, enabling informed capital allocation.

2

Analyze the executive bonus calculation scenario for Commercial Stationery.

Pair the manager bonus calculation with evaluating departmental leadership performance.

Departmental accounting segregates operating performance so managers can be held accountable and rewarded strictly for results under their control.

3

Analyze the cost allocation mechanism for shared premises.

Pair the distribution of building rent and power with apportioning overhead expenses.

Common indirect costs must be distributed to departments using equitable bases (such as floor space or wattage) to determine true net profits.

4

Analyze the gross margin comparison for the Book Publishing division.

Pair the stock wastage identification with monitoring operational efficiency and cost control.

Separate departmental trading accounts reveal direct costs and gross margins, exposing waste or inefficiency in specific operating units.

Anahtar Kavram

Objectives and Reasons for Departmental Accounts

Soru 23Soru →

Zenith Hospitality Enterprise operates a lodging unit, a restaurant, and a laundry facility within the same commercial premises. At the end of the accounting period, management prepares separate trading and profit and loss accounts for each operating unit rather than relying solely on a single combined financial statement. What is the primary objective of preparing departmental accounts in this scenario?

To ascertain the net profit or loss of each operational division to enable management to evaluate efficiency and decide on segment expansion or closure.

To create distinct legal identities for each unit so that corporate liabilities can be legally isolated from the main enterprise.

To satisfy statutory tax authorities requiring separate annual tax returns for every operating section of a single firm.

To eliminate the necessity of allocating and apportioning shared administrative overhead expenses across divisions.

Cevabı ve açıklamayı göster

Cevap: To ascertain the net profit or loss of each operational division to enable management to evaluate efficiency and decide on segment expansion or closure.

Cevap

The primary objective of departmental accounts is to ascertain the individual net profit or loss of each operating segment, providing management with accurate data to evaluate performance, reward efficiency, and decide whether to expand or close specific departments.

The fundamental reason for preparing departmental accounts is to track and ascertain the separate profit or loss of each department within a business. This granular financial information allows management to assess operational efficiency, reward divisional managers, and decide whether to expand, modify, or shut down specific departments.

Adım Adım Çözüm

1

Identify the purpose of departmental accounting in multi-segment businesses operating under one roof.

Recognize that departmental accounts break down total business operational revenues and expenses by individual operating sections.

Aggregated accounts obscure individual divisional performance, masking unprofitable departments with profits from successful ones.

2

Evaluate the management decision-making benefits of segmenting financial performance.

Management gains clear visibility into which departments contribute to overall profit, enabling informed decisions on resource allocation, manager incentives, or unit discontinuation.

Evaluating divisional efficiency and profitability is the core managerial objective of departmental accounts.

Anahtar Kavram

Objectives and Reasons for Departmental Accounts

Soru 24Soru →

A trading firm operates three departments: X, Y, and Z. During the financial year, total Rent and Rates paid amounted to $₦120,000$ , which includes a prepayment of $₦20,000$ for the subsequent accounting period. The floor areas occupied by the departments are $1,200\text{ sq. meters}$ for Department X, $800\text{ sq. meters}$ for Department Y, and $500\text{ sq. meters}$ for Department Z. What is the correct amount of Rent and Rates to be charged to Department Y in the departmental profit and loss account?

₦32,000

₦38,400

₦44,800

₦48,000

Cevabı ve açıklamayı göster

Cevap: ₦32,000

Cevap

The amount of Rent and Rates to be charged to Department Y is ₦32,000.

The correct charge is ₦32,000. Rent and rates expense must be adjusted by subtracting the prepaid amount of ₦20,000 from the total cash paid of ₦120,000 to arrive at the actual current period expense of ₦100,000. Rent is equitable apportioned on the basis of floor area occupied; Department Y occupies 800 sq. meters out of a total 2,500 sq. meters (800/2,500 = 32%), yielding ₦32,000.

Adım Adım Çözüm

1

Adjust total Rent and Rates for prepayment

Net Rent and Rates expense =

₦120,000 - ₦20,000 = ₦100,000

Prepayments represent expenses paid for a future period and must be deducted to obtain the net expense for the current year.

2

Determine total floor area

Total floor area =

1,200 + 800 + 500 = 2,500\text{ sq. meters}

Rent and Rates are equitable overheads best apportioned using the relative floor space occupied by each department.

3

Calculate Department Y's portion

Department Y share =

\frac{800}{2,500} \times ₦100,000 = ₦32,000

Multiplying the net current expense by Department Y's fraction of the total floor space gives its apportioned charge.

Anahtar Kavram

Apportionment of departmental expenses based on floor area after adjusting for prepaid expenses.

Tahmini Süre:2m 0s

Soru 25Soru →

Graceful Fashions operates two departments: Clothing and Footwear. For the year ended 31 December 2025, the total rent expense incurred by the business was $\text{N} 120,000$ . Rent expense is apportioned between departments based on floor area occupied. If the Clothing Department occupies $600\text{ m}^2$ and the Footwear Department occupies $400\text{ m}^2$ , what is the amount of rent (in Naira) apportioned to the Clothing Department?

Cevabı ve açıklamayı göster

Cevap: 72000

Cevap

The amount of rent apportioned to the Clothing Department is 72,000 Naira.

Total floor area is

600\text{ m}^2 + 400\text{ m}^2 = 1,000\text{ m}^2

. The Clothing Department occupies

\frac{600}{1,000} = 60\%

of the space. Apportioned rent for Clothing is

60\% \times \text{N} 120,000 = \text{N} 72,000

.

Adım Adım Çözüm

1

Calculate total floor area occupied by both departments.

Total floor area = 1,000 square meters.

The total area forms the denominator for the apportionment ratio.

2

Calculate the proportion of total floor area used by the Clothing Department.

Proportion = 600 / 1,000 = 3/5 or 0.60.

Rent is allocated according to the ratio of space occupied.

3

Multiply total rent by the Clothing Department's proportion.

Apportioned Rent = 0.60 x 120,000 = 72,000 Naira.

This calculates the specific rent expense attributable to the Clothing Department.

Anahtar Kavram

Apportionment of departmental expenses using floor area as a basis.

Soru 26Soru →

Lumina Stores operates two departments: Assembly and Packaging. During the trading year, total canteen expenses incurred amounted to $₦50,000$ . Assembly employs $30$ workers, while Packaging employs $20$ workers. What is the amount of canteen expenses to be apportioned to the Packaging department?

₦30,000

₦20,000

₦25,000

₦50,000

Cevabı ve açıklamayı göster

Cevap: ₦20,000

Cevap

The amount of canteen expenses apportioned to the Packaging department is ₦20,000.

Canteen expenses are an indirect staff-related cost and are equitably apportioned using the number of employees in each department. The total number of employees is

30 + 20 = 50

. Packaging's share is calculated as

\frac{20}{50} \times ₦50,000 = ₦20,000

.

Adım Adım Çözüm

1

Identify the total expense and the appropriate basis of apportionment.

Total canteen expense =

₦50,000

. Standard basis for canteen expenses is the number of employees.

Canteen expenses benefit employees directly, so employee headcount provides an equitable distribution.

2

Calculate total employee count and the proportion for the Packaging department.

Total employees =

30 + 20 = 50

. Packaging ratio =

\frac{20}{50} = \frac{2}{5}

.

Determining the fractional share of Packaging relative to the business total.

3

Multiply the fraction by total canteen expenses.

Packaging share =

\frac{20}{50} \times ₦50,000 = ₦20,000

.

Calculates the monetary expense charged to the Packaging departmental profit and loss account.

Anahtar Kavram

Apportionment of indirect staff expenses based on departmental headcount

Soru 27Soru →

Apex Enterprises operates three departments: Department A, Department B, and Department C. During the year ended 31st December 2025, total insurance premium paid was $₦520,000$ , which includes an unexpired insurance (prepayment) of $₦70,000$ .

It was ascertained that of the net insurance cost:
- $60\%$ relates to factory building insurance, which is apportioned on the basis of floor space area.
- $40\%$ relates to plant and machinery insurance, which is apportioned on the basis of book value of machinery.

The departmental details are provided below:
- Floor Space (sq. meters): Dept A = $1,500$ ; Dept B = $2,000$ ; Dept C = $1,500$
- **Book Value of Machinery ( $₦$ )**: Dept A = $₦1,200,000$ ; Dept B = $₦800,000$ ; Dept C = $₦2,000,000$

What is the total amount of insurance expense to be apportioned to Department B?

Cevabı ve açıklamayı göster

Cevap: 144000

Cevap

The total insurance expense apportioned to Department B is

₦144,000

.

To compute the total insurance cost for Department B, the net insurance expense (

₦450,000

) after deducting the

₦70,000

prepayment is divided into building insurance (

₦270,000

) and machinery insurance (

₦180,000

). Department B occupies

\frac{2,000}{5,000}

(

40\%

) of total floor space, incurring

₦108,000

for building insurance, and holds

\frac{800,000}{4,000,000}

(

20\%

) of total machinery value, incurring

₦36,000

for machinery insurance. Adding both components gives

₦144,000

.

Adım Adım Çözüm

1

Adjust total insurance paid for prepayment to get the net expense for the current period.

Net Insurance Expense =

₦520,000 - ₦70,000 = ₦450,000

.

Only the expense relating to the current financial year should be apportioned among departments.

2

Divide net insurance expense into building insurance and machinery insurance.

Building Insurance =

60\% \times ₦450,000 = ₦270,000

; Machinery Insurance =

40\% \times ₦450,000 = ₦180,000

.

Each type of insurance has a different equitable basis of apportionment.

3

Determine Department B's portion of building insurance using floor space ratio.

Total floor space =

1,500 + 2,000 + 1,500 = 5,000

sq. meters. Department B share =

\frac{2,000}{5,000} \times ₦270,000 = ₦108,000

.

Building rent and insurance expenses are equitably apportioned based on floor space occupied.

4

Determine Department B's portion of machinery insurance using book value of machinery ratio.

Total machinery value =

₦1,200,000 + ₦800,000 + ₦2,000,000 = ₦4,000,000

. Department B share =

\frac{800,000}{4,000,000} \times ₦180,000 = ₦36,000

.

Machinery insurance is apportioned based on the capital values/book values of the machinery in each department.

5

Sum Department B's shares from both building and machinery insurance.

Total Department B Insurance =

₦108,000 + ₦36,000 = ₦144,000

.

The total expense charged to Department B is the sum of all individual apportioned overhead costs.

Anahtar Kavram

Dual-basis apportionment of departmental expenses with accrual/prepayment adjustments

Soru 28Soru →

Apex Retailers operates two departments: Department P and Department Q. For the financial year ended 31 December 2025, the following balances were extracted from the books:

Item	Department P (₦)	Department Q (₦)
Sales	400,000	600,000
Opening Stock	50,000	70,000
Purchases	250,000	350,000
Closing Stock	40,000	60,000

Additional financial information:
1. Department P transferred goods costing $₦30,000$ to Department Q at a transfer price incorporating a $20\%$ mark-up on cost.
2. Shared Administrative Salaries of $₦120,000$ are to be apportioned based on staff headcount (Department P has 6 staff members, Department Q has 4 staff members).
3. Total Rent and Rates paid was $₦50,000$ , which includes $₦10,000$ prepaid for the subsequent year. Rent is apportioned based on floor space occupied (Department P: $1,200\text{ sq ft}$ ; Department Q: $800\text{ sq ft}$ ).
4. Total Discount Allowed of $₦20,000$ is to be apportioned on the basis of sales turnover.

What is the net profit of Department Q for the year ended 31 December 2025 in Naira ( $₦$ )?

Cevabı ve açıklamayı göster

Cevap: 128000

Cevap

The net profit of Department Q for the year ended 31 December 2025 is ₦128,000.

The net profit of ₦128,000 is correctly determined by calculating Department Q's gross profit after accounting for the inter-departmental transfer in at transfer price (₦36,000), subtracting proper closing stock, and deducting all appropriately apportioned operating expenses after adjusting rent for prepaid amounts.

Adım Adım Çözüm

1

Calculate Inter-Departmental Transfer Value

Transfer Price =

₦36,000

Department P transferred goods costing

₦30,000

to Department Q at cost plus a

20\%

mark-up:

30,000 + (20\% \times 30,000) = 36,000

. Department Q records this as a transfer in to its trading account.

2

Determine Department Q Gross Profit

Gross Profit =

₦204,000

Cost of Goods Sold (COGS) for Department Q = Opening Stock (

₦70,000

) + Purchases (

₦350,000

) + Transfer In (

₦36,000

) - Closing Stock (

₦60,000

) =

₦396,000

. Gross Profit = Sales (

₦600,000

) - COGS (

₦396,000

) =

₦204,000

.

3

Calculate Apportioned Expenses for Department Q

Total Department Q Expenses =

₦76,000

Salaries apportioned by headcount (

6:4

):

₦120,000 \times \frac{4}{10} = ₦48,000

. Net Rent Expense after subtracting

₦10,000

prepayment (

₦50,000 - ₦10,000 = ₦40,000

) apportioned by floor area (

1,200:800

):

₦40,000 \times \frac{800}{2,000} = ₦16,000

. Discount Allowed apportioned by sales ratio (

400,000:600,000

):

₦20,000 \times \frac{600,000}{1,000,000} = ₦12,000

. Total expenses =

48,000 + 16,000 + 12,000 = ₦76,000

.

4

Compute Net Profit of Department Q

Net Profit =

₦128,000

Net Profit = Gross Profit (

₦204,000

) - Total Expenses (

₦76,000

) =

₦128,000

.

Anahtar Kavram

Preparation of Departmental Trading, Profit and Loss Accounts with inter-departmental transfers and multi-basis expense apportionment

Tahmini Süre:3m 0s

Soru 29Soru →

A retail store operates three separate divisions—clothing, footwear, and cosmetics—under a single management and roof. Which of the following is a primary objective of preparing departmental accounts for this business?

To ascertain the profit or loss made by each individual division

To establish each division as a separate legal entity

To replace basic double-entry bookkeeping with departmental summaries

To file independent tax returns for each division with revenue authorities

Cevabı ve açıklamayı göster

Cevap: To ascertain the profit or loss made by each individual division

Cevap

The primary objective of preparing departmental accounts is to ascertain the profit or loss made by each individual division.

Departmental accounting is designed to track financial performance at the divisional level so management can calculate individual departmental profits or losses, compare efficiency across units, and make informed operational decisions.

Adım Adım Çözüm

1

Identify the purpose of departmental accounting

Departmental accounting breaks down financial results by operational units within the same organization.

This allows management to assess the financial contribution and trading results of each distinct unit.

2

Evaluate the option choices against core accounting principles

Ascertaining division-level profitability directly aligns with segment performance evaluation.

Legal entity status, tax filings, and replacing bookkeeping are invalid purposes for departmental record-keeping.

Anahtar Kavram

Objectives of Departmental Accounting

Tahmini Süre:45s

Soru 30Soru →

Kambai Logistics Enterprise operates three distinct service divisions—Haulage, Warehousing, and Vehicle Maintenance—under one management structure. The firm prepares separate trading and profit and loss accounts for each division at the end of every financial period. What is the primary objective of adopting this departmental accounting system?

To evaluate the relative profit contribution and operational efficiency of each division to guide internal managerial decisions.

To establish separate legal identities for each division in compliance with corporate registration requirements.

To ensure that all indirect operating expenses are apportioned equally among departments irrespective of operational usage.

To replace the double-entry bookkeeping function with routine financial interpretation.

Cevabı ve açıklamayı göster

Cevap: To evaluate the relative profit contribution and operational efficiency of each division to guide internal managerial decisions.

Cevap

The primary objective of adopting a departmental accounting system is to evaluate the relative profit contribution and operational efficiency of each division to guide internal managerial decisions.

Departmental accounting provides detailed financial reports for each operational unit within a business. This allows management to assess individual departmental performance, compare operational efficiency across divisions, formulate manager incentives, and decide whether to expand or restructure specific departments.

Adım Adım Çözüm

1

Identify the purpose of preparing segment-specific trading and profit and loss accounts.

Recognize that segmenting financial results isolates performance metrics for individual units within the business.

Management needs segment-level data to determine which units are profitable, efficient, or requiring corrective action.

2

Distinguish departmental accounting objectives from legal and bookkeeping concepts.

Departmental accounts are internal operational tools, not statutory requirements for forming separate legal corporations.

All departments remain under one single legal entity.

Anahtar Kavram

Objectives of Departmental Accounts

Soru 31Soru →

Zeno Enterprises operates three departments: Department Alpha, Department Beta, and Department Gamma. During the financial year ended 31st December 2025, total Rent and Rates paid was $₦270,000$ , which includes a prepayment of $₦30,000$ for the following year. The floor space occupied by the departments is $500\text{ m}^2$ for Alpha, $300\text{ m}^2$ for Beta, and $400\text{ m}^2$ for Gamma. What is the amount of Rent and Rates to be apportioned to Department Beta?

Cevabı ve açıklamayı göster

Cevap: 60000

Cevap

The amount of Rent and Rates apportioned to Department Beta is

₦60,000

.

Rent and Rates are apportioned using floor space occupied as the equitable basis. The actual expense incurred for the accounting year is

₦270,000 - ₦30,000 = ₦240,000

. Department Beta occupies

300\text{ m}^2

out of a total

1,200\text{ m}^2

, so its share is

\frac{300}{1,200} \times ₦240,000 = ₦60,000

.

Adım Adım Çözüm

1

Calculate the net Rent and Rates expense for the financial year

₦240,000

Prepayments relate to the subsequent financial period and must be deducted from cash paid to arrive at the actual expense incurred for the period.

2

Calculate total floor space occupied across all departments

1,200\text{ m}^2

Rent and Rates expenses are equitably apportioned on the basis of floor area occupied.

3

Calculate Department Beta's share of the net Rent and Rates expense

₦60,000

Multiply the net rent expense by Department Beta's fraction of the total floor space:

\frac{300\text{ m}^2}{1,200\text{ m}^2} \times ₦240,000 = ₦60,000

.

Anahtar Kavram

Apportionment of Rent and Rates based on floor area after adjusting for prepaid expenses.

Soru 32Soru →

A trading business operates multiple divisions under one management. Match each departmental accounting action on the left with its corresponding primary objective on the right.

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Cevabı ve açıklamayı göster

Cevap

Each departmental accounting action directly aligns with its specific management purpose: comparing gross margins evaluates relative departmental efficiency; determining whether to discontinue a unit facilitates segment closure or expansion decisions; calculating bonuses based on divisional profit rewards managers accurately; and tracking inter-segment transfers maintains effective operational and inventory control.

Departmental accounting provides internal financial visibility across distinct operational sections. Comparing profit margins shows relative operational efficiency across units. Analyzing unit profitability informs decision-making regarding closure or expansion. Determining individual segment net profit allows fair performance-based rewards for section managers. Finally, tracking inter-departmental transfers ensures proper control over inventory and internal resources.

Adım Adım Çözüm

1

Identify the primary purpose of departmental accounting

Departmental accounting aims to ascertain separate trading results for distinct units operating under the same business roof.

Segmenting accounting records enables management to evaluate each section independently rather than assessing only the combined results of the entire firm.

2

Match operational actions to management objectives

Margin comparison maps to efficiency evaluation; closure evaluation maps to decision-making on unprofitable segments; profit-based bonuses map to managerial rewards; and transfer tracking maps to inventory control.

Each specific accounting activity addresses a targeted need in planning, controlling, or evaluating departmental operations.

Anahtar Kavram

Objectives of Departmental Accounts

Soru 33Soru →

Apex Commercial Enterprises operates two distinct departments: Department A and Department B. For the financial year ended 31 December 2025, the following trial balance extracts were made available:

Transaction Details	Department A ( $₦$ )	Department B ( $₦$ )	Total ( $₦$ )
Sales	600,000	400,000	1,000,000
Purchases	360,000	240,000	600,000
Opening Inventory	50,000	40,000	90,000
Closing Inventory	70,000	50,000	120,000
Floor Area Occupied	1,000 sq. m	3,000 sq. m	4,000 sq. m

Additional common expenses incurred during the year were:
- Carriage Inwards: $₦50,000$ (to be apportioned on the basis of purchases)
- Rent and Rates: $₦80,000$ (to be apportioned on the basis of floor area occupied)
- Salaries and Wages: $₦100,000$ (to be apportioned on the basis of turnover)

Based on the information provided, what is the net profit of Department A?

₦150,000

₦122,000

₦180,000

₦110,000

Cevabı ve açıklamayı göster

Cevap: ₦150,000

Cevap

The net profit of Department A is ₦150,000.

Department A achieves a gross profit of

₦230,000

(

₦600,000

sales -

₦370,000

cost of goods sold). Deducting its total apportioned expenses of

₦80,000

(

₦20,000

rent based on 1:3 floor area ratio +

₦60,000

salaries based on 3:2 turnover ratio) gives a net profit of

₦150,000

.

Adım Adım Çözüm

1

Apportion Carriage Inwards to Department A

Carriage Inwards for Department A =

\frac{360,000}{600,000} \times ₦50,000 = \frac{3}{5} \times ₦50,000 = ₦30,000

Carriage inwards is directly linked to goods purchased, so it is apportioned using the purchases ratio.

2

Calculate Cost of Goods Sold (COGS) and Gross Profit for Department A

COGS = Opening Inventory (

₦50,000

) + Purchases (

₦360,000

) + Carriage Inwards (

₦30,000

) - Closing Inventory (

₦70,000

) =

₦370,000

.
Gross Profit = Sales (

₦600,000

) - COGS (

₦370,000

) =

₦230,000

.

Gross profit is determined by subtracting cost of goods sold (including direct buying expenses) from departmental sales.

3

Apportion Rent & Rates and Salaries & Wages to Department A

Rent & Rates =

\frac{1,000}{4,000} \times ₦80,000 = \frac{1}{4} \times ₦80,000 = ₦20,000

.
Salaries & Wages =

\frac{600,000}{1,000,000} \times ₦100,000 = \frac{3}{5} \times ₦100,000 = ₦60,000

.
Total Operating Expenses for Dept A =

₦20,000 + ₦60,000 = ₦80,000

.

Rent is apportioned based on floor area occupied, while salaries are apportioned based on turnover.

4

Calculate Net Profit for Department A

Net Profit = Gross Profit (

₦230,000

) - Total Expenses (

₦80,000

) =

₦150,000

.

Departmental net profit is derived by deducting apportioned indirect expenses from departmental gross profit.

Anahtar Kavram

Departmental Trading, Profit and Loss Account preparation involves allocating direct expenses to COGS and apportioning indirect overheads according to appropriate cost drivers (floor area for rent, turnover for salaries, purchases for carriage inwards).

Soru 34Soru →

A commercial farm enterprise operates three distinct operational divisions—Crop Farming, Livestock Raising, and Agro-Processing—within the same physical premises. What is the primary accounting reason for preparing separate departmental trading and profit and loss accounts for each division rather than relying solely on a single overall profit figure for the entire enterprise?

To evaluate the operational efficiency and net profitability of each individual division to inform managerial decisions regarding expansion or closure

To establish each division as a separate legal entity so that individual tax returns can be filed independently with tax authorities

To eliminate the necessity of recording routine bookkeeping transactions in original entry journals

To avoid the need to allocate shared operating overheads such as rent and electricity across operational units

Cevabı ve açıklamayı göster

Cevap: To evaluate the operational efficiency and net profitability of each individual division to inform managerial decisions regarding expansion or closure

Cevap

The primary objective of preparing departmental accounts is to evaluate the operational efficiency and net profitability of each individual division to guide management decisions on expansion, restructuring, or closure.

The fundamental objective of departmental accounting is to compute the individual profit or loss of each operational division within an organization. This enables management to evaluate performance, reward department managers fairly, assess operational efficiency, and decide whether to expand, maintain, or close specific segments.

Adım Adım Çözüm

1

Identify the core accounting function of departmental accounts

Departmental accounts segment financial reporting by operational units working within the same business entity.

This segmentation isolates revenue, direct costs, and apportioned overheads for each department.

2

Analyze the managerial benefits of departmental profit determination

Management can compare departmental performance, reward efficient managers, and identify unprofitable units.

Relying on a single combined profit figure might conceal a failing department whose losses are disguised by a highly profitable department.

Anahtar Kavram

Primary Objectives of Departmental Accounts

Tahmini Süre:1m 0s

Soru 35Soru →

In departmental accounting, indirect expenses are apportioned to departments using equitable bases of allocation. Match each overhead expense on the left with the most appropriate basis of apportionment on the right.

Soldaki öğeye tıklayın, sonra eşleşen sağdaki öğeye tıklayın

Cevabı ve açıklamayı göster

Cevap

Rent and rates matches floor space occupied; Canteen and staff welfare matches number of employees; Depreciation of plant and machinery matches capital value of machinery; Heating and air conditioning matches cubic capacity.

Each expense is matched with its logical cost driver according to standard accounting principles: premises costs correspond to floor area, personnel costs correspond to headcount, equipment depreciation corresponds to asset valuation, and volume-based climate costs correspond to cubic capacity.

Adım Adım Çözüm

1

Identify the driver for space-related property expenses

Rent and rates are tied to building area, making floor space the proper apportionment basis.

Indirect premises expenses benefit departments according to the physical area they occupy.

2

Identify the driver for personnel-related expenses

Canteen and staff welfare costs depend on headcount, making number of employees the appropriate basis.

Welfare benefits accrue on a per-worker basis.

3

Identify the driver for fixed asset usage expenses

Depreciation of equipment is linked to asset value, making capital value of machinery the proper basis.

Higher-value machinery incurs a proportionately larger share of total depreciation.

4

Identify the driver for environmental control expenses

Heating and air conditioning depend on total volume, making cubic capacity the correct basis.

Energy required for temperature regulation correlates with volume of space rather than surface area alone.

Anahtar Kavram

Apportionment of Indirect Expenses on Equitable Bases in Departmental Accounts

Soru 36Soru →

Autotech Dynamics operates three operational units—Car Sales, Spare Parts, and Vehicle Servicing—within a single facility under unified management. Which of the following best describes the primary objective of preparing departmental accounts for this enterprise?

To establish each operational unit as an independent legal entity separate from the overall firm

To evaluate the comparative financial performance of each operational unit to assist management in decision-making

To monitor transactions occurring across geographically dispersed business locations

To fulfill statutory requirements for publishing separate audited balance sheets for external stakeholders

Cevabı ve açıklamayı göster

Cevap: To evaluate the comparative financial performance of each operational unit to assist management in decision-making

Cevap

The primary objective of preparing departmental accounts is to evaluate the comparative financial performance of each operational unit to assist management in decision-making.

Departmental accounting isolates revenues, direct expenses, and allocated indirect costs per department. This gives management precise visibility into individual segment profitability and efficiency, aiding internal decisions such as manager reward allocations, pricing adjustments, or unit expansions.

Adım Adım Çözüm

1

Analyze the operational setup given in the stem.

The enterprise runs multiple specialized business segments (Car Sales, Spare Parts, Vehicle Servicing) within a single location under one ownership.

Identifying this structure distinguishes internal departmental accounting from external branch accounting.

2

Identify the main managerial requirement for segmenting accounting records.

Management needs to measure gross and net profit for each division separately to compare efficiency, allocate overheads, and decide on expansion or closure.

Departmental accounting provides unit-specific profitability metrics that overall company-wide financial accounts obscure.

Anahtar Kavram

Objectives and Reasons for Departmental Accounts

Tahmini Süre:1m 0s

Soru 37Soru →

Kano Manufacturing Enterprise operates two departments: Processing and Assembly. The Processing Department transfers semi-finished goods to the Assembly Department at cost plus a mark-up of $40\%$ . At the end of the financial year, the Assembly Department held closing inventory valued at $\text{N}84,000$ , of which $75\%$ represents goods transferred from the Processing Department. Calculate the required provision for unrealized profit on the closing inventory of the Assembly Department.

Cevabı ve açıklamayı göster

Cevap: 18000

Cevap

The required provision for unrealized profit on the closing inventory of the Assembly Department is 18,000 NGN.

The provision for unrealized profit is calculated by isolating the transferred goods in closing inventory (75% of N84,000 = N63,000) and applying the profit margin rate derived from the 40% mark-up on cost: Margin = 40 / 140 = 2/7. Multiplying N63,000 by 2/7 yields N18,000.

Adım Adım Çözüm

1

Calculate the value of transferred stock contained within the Assembly Department's closing inventory.

Transferred Stock = 75% of N84,000 = N63,000.

Only the portion of closing stock acquired via inter-departmental transfer contains unrealized departmental profit.

2

Convert the transfer mark-up rate to a profit margin rate based on the transfer price.

Profit Margin = 40 / (100 + 40) = 40/140 = 2/7.

The inventory valuation is given at transfer price (selling price), so the mark-up on cost must be converted to a margin on transfer price.

3

Multiply the transferred stock value by the profit margin rate to compute the provision for unrealized profit.

Provision for Unrealized Profit = (2 / 7) * N63,000 = N18,000.

This represents the profit loaded onto the transferred goods that remains unrealized because the goods have not yet been sold to external customers.

Anahtar Kavram

Provision for Unrealized Profit on Inter-departmental Stock Transfers

Soru 38Soru →

Calabar Crafts Limited operates two departments: Spinning and Garment. The Spinning Department transfers yarn to the Garment Department at cost plus a mark-up of $25\%$ . At the end of the accounting period, the Garment Department holds closing inventory valued at $\text{N}40,000$ , which includes $\text{N}30,000$ worth of yarn transferred from the Spinning Department. What is the amount of provision for unrealized profit to be debited to the General Profit and Loss Account?

\text{N}6,000

\text{N}7,500

\text{N}8,000

\text{N}10,000

Cevabı ve açıklamayı göster

Cevap: $\text{N}6,000$

Cevap

\text{N}6,000

The transfer price includes a

25\%

mark-up on cost, which corresponds to a profit margin of

20\%

(or

\frac{1}{5}

) on the transfer price. Since the Garment Department holds

\text{N}30,000

worth of transferred stock at the end of the period, the unrealized profit embedded in closing inventory is

20\% \text{ of } \text{N}30,000 = \text{N}6,000

. This amount must be debited to the General Profit and Loss Account to eliminate internal unrealized profit.

Adım Adım Çözüm

1

Convert the mark-up on cost to profit margin on transfer price (selling price).

\text{Margin} = \frac{\text{Mark-up}}{100 + \text{Mark-up}} = \frac{25}{125} = \frac{1}{5} = 20\%

Inter-departmental transfer price represents the selling price from the perspective of the transferring department. Unrealized profit must be calculated as a percentage of this transfer price.

2

Identify the portion of closing inventory containing transferred goods.

\text{Transferred Stock Element} = \text{N}30,000

Only goods originating from internal transfers contain an unrealized profit element, not goods purchased externally.

3

Calculate the provision for unrealized profit.

\text{Provision for Unrealized Profit} = 20\% \times \text{N}30,000 = \text{N}6,000

Multiplying the profit margin by the transfer value of remaining stock isolates the profit element that has not yet been realized through external sales.

Anahtar Kavram

Provision for Unrealized Profit on Inter-departmental Transfers

Tahmini Süre:2m 0s

Soru 39Soru →

Kano Electronics Enterprise operates two departments: Department A and Department B. For the accounting year ended 31 December 2025, the total sales turnover for the business was ₦500,000, of which Department A generated ₦300,000 and Department B generated ₦200,000. Total advertising expenses of ₦50,000 were incurred and are to be apportioned between the two departments on the basis of sales turnover. What is the amount of advertising expense apportioned to Department A?

Cevabı ve açıklamayı göster

Cevap: 30000

Cevap

The amount of advertising expense apportioned to Department A is ₦30,000.

Advertising expenses are apportioned to departments based on their share of total turnover. Department A contributes ₦300,000 out of a total ₦500,000 sales (60%). Therefore, 60% of the ₦50,000 advertising expense equals ₦30,000.

Adım Adım Çözüm

1

Determine the proportion of sales generated by Department A relative to total business turnover.

Department A ratio = ₦300,000 / ₦500,000 = 0.60 (or 60%).

Advertising expenses are apportioned according to sales turnover.

2

Calculate Department A's share of the total advertising expense.

Apportioned expense = ₦50,000 × 0.60 = ₦30,000.

Applying the turnover proportion to the total expense yields the departmental charge.

Anahtar Kavram

Apportionment of general operating expenses based on turnover in departmental profit and loss accounts.

Tahmini Süre:45s

Soru 40Soru →

Kano Outfitters operates two selling divisions: Men's Wear and Women's Wear. For the financial year ended 31 December 2025, the following departmental financial information is available:

Details	Men's Wear (₦)	Women's Wear (₦)
Opening stock	30,000	25,000
Purchases	150,000	120,000
Sales	250,000	200,000
Closing stock	40,000	35,000

Total joint expenses incurred during the year were:
- Rent and rates: ₦36,000 (apportioned based on floor space occupied: Men's Wear = 600 sq. m; Women's Wear = 400 sq. m)
- Salaries and wages: ₦50,000 (apportioned based on staff count: Men's Wear = 12 employees; Women's Wear = 8 employees)
- Direct advertising expense for Men's Wear: ₦8,400

What is the net profit of the Men's Wear division?

₦50,000

₦58,600

Net loss of ₦30,000

₦60,000

Cevabı ve açıklamayı göster

Cevap: ₦50,000

Cevap

The net profit of the Men's Wear division is ₦50,000.

The correct net profit is calculated by first finding the gross profit of Men's Wear (₦250,000 - ₦140,000 = ₦110,000) and then deducting total apportioned and direct expenses (Rent: ₦21,600 + Salaries: ₦30,000 + Direct Advertising: ₦8,400 = ₦60,000), leaving a net profit of ₦50,000.

Adım Adım Çözüm

1

Calculate Cost of Goods Sold (COGS) for Men's Wear

COGS = Opening Stock (₦30,000) + Purchases (₦150,000) - Closing Stock (₦40,000) = ₦140,000

Cost of goods sold represents the direct cost of inventory sold during the period.

2

Calculate Gross Profit for Men's Wear

Gross Profit = Sales (₦250,000) - COGS (₦140,000) = ₦110,000

Gross profit is the difference between total sales turnover and cost of goods sold.

3

Apportion joint expenses for Men's Wear

Rent = ₦36,000 × (600 / 1,000) = ₦21,600; Salaries = ₦50,000 × (12 / 20) = ₦30,000; Direct Advertising = ₦8,400. Total Expenses = ₦21,600 + ₦30,000 + ₦8,400 = ₦60,000

Joint expenses must be apportioned using their specified bases (floor space for rent, headcount for salaries).

4

Calculate Net Profit for Men's Wear

Net Profit = Gross Profit (₦110,000) - Total Expenses (₦60,000) = ₦50,000

Net profit is obtained by deducting total operating expenses from gross profit.

Anahtar Kavram

Departmental Trading, Profit and Loss Account Preparation

Departmental and Branch Accounts

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