50 BULLETIN 381, U. S. DEPARTMENT OF AGEICULTURE. 



Departmental Cost Accounts. 



For the purpose of determining the results of the various depart- 

 ments of the business and of setting up a satisfactory trading account, 

 cost records should be kept with the different departments when- 

 ever practicable. Usually this record consists of only *a few sub- 

 divisions of the Merchandise Account, such as Groceries, Dry Goods, 

 Hardware and Implements. Entire bills are charged to the several 

 accounts, so far as practicable, and bills which contain different 

 classes of items must be segregated before they are paid and filed. 

 The total of each division is then charged at convenient intervals 

 to the departmental accounts. In a similar manner the sales are 

 distributed and credited to the accounts. The triphcate copy of 

 the sales slip will be found a convenient basis for the classification 

 of credit sales. Either a cash register in each department or one 

 register containing a departmental totahng device must be used in 

 classifying cash sales. 



The result, after taking into account the inventories at the be- 

 ginning and end of the period, and after charging each department 

 with its proportion of the overhead expenses, usually based on the 

 turnover, shows the gain or loss of each department. A complete 

 analysis of the gross cost, net cost, and general profits and losses 

 of the business as a whole are found in the Manager's Keport. The 

 cost accounts are independent of the general accounts, and can be 

 subdivided and modified at pleasure. However, they should check 

 with the general trading account as prepared from the General 

 Ledger (Form 7, II A). The usual stock ledger will be found a 

 convenient form for the cost accounts. 



AUDITING. 



The object of the audit is threefold: (1) To serve as a check on the 

 bookkeeper, so that a system of accounts, once estabhshed, be 

 adhered to without deviation; (2) to serve as a rehable source of infor- 

 mation to the stockholders as to the conduct and condition of the 

 business, and accuracy of reports; and (3) the auditor should act as 

 a counselor respecting business methods, especially pertaining to the 

 office practice. The importance of the audit is often overlooked. 

 No single factor wiU contribute more to the success of any corporate 

 enterprise than a strict audit. It must not be forgotten that the 

 auditor is primarily the servant of the stockholders, and not of the 

 directors. 



Many a cooperative enterprise has been wrecked because there has 

 been no imity of pohcy respecting the methods of accounting and 

 office practice. An imsatisfactory system of accounts is often better 

 in the hands of an accountant who constantly keeps it up to date 

 than the most perfect system in the hands of an inefficient book- 

 keeper. 



