Departmental Account - Meaning/Definition - SS3 Accounting Lesson Note

Departmental accounts refer to a type of accounting system that separates the financial information of a business into different departments or segments. This allows the business to track the financial performance of each department separately and make informed decisions based on the data collected.

In a departmental account, each department is treated as a separate entity and is given a separate set of accounts to record its financial transactions. These accounts are then consolidated into a single set of financial statements for the entire business.

Departmental accounts are commonly used in large businesses that have multiple departments or product lines. By analyzing the financial data for each department separately, the business can identify which departments are profitable and which are not. This information can then be used to make strategic decisions, such as investing more resources into profitable departments and cutting costs in unprofitable ones.