50 BULLETIN 381, U. S. DEPARTMENT OF AGRICULTURE. 
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 triplicate 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 totaling 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 established, be 
adhered to without deviation; (2) to serve as a reliable 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 will 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 unity of policy respecting the methods of accounting and 
office practice. An unsatisfactory 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. 
