ADVANTAGES OF DEPARTMENTAL ACCOUNT



1)      The trading results of each department may help to evaluate the performance of each department. The sales of that department which fives maximum profit may be pushed up by special efforts.

2)      The profitability of each department may help the management for taking decision whether to drop a department or add a new one.

3)      The growth potentials of a department can be evaluated by having comparison with the other departments.

4)      The users of accounting information can be provide mode detailed information like the shareholder, investors, creditors etc.

5)      The overall profits of the organization can be increased by having friendly rivalries between different departments.

6)      The departmental managers and staff can be suitably rewarded on the basis of the departmental results.

7)      It helps the management to determine the justification of proper use of capital invested in each department.

8)      It helps to have comparison of various expenses of each department with the previous period or with other departments of the same concern.

9)      It helps to know he efficiency of each department by calculating stock turnover ratio of each department to reveal the fast or slow moment of various items of stock.


10)   The information provided by departmental accounts may be helpful to the management for future intelligent planning and control.

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