In departmental accounting, when goods are sent from one department to another for sale the transaction is treated as

Answer Details

In departmental accounting, when goods are sent from one department to another for sale, the transaction is treated as an Inter-departmental transfer. An inter-departmental transfer refers to the movement of goods or services from one department of a business to another department for further processing or sale. In departmental accounting, inter-departmental transfers are treated as internal transactions that do not involve any external parties. When goods are sent from one department to another for sale, the department that receives the goods will record them as inventory or stock-in-trade, while the department that sends the goods will record them as a cost of goods sold or cost of production. This transaction does not affect the overall profit or loss of the business, as it merely represents a transfer of goods within the organization. Therefore, the correct treatment of this transaction is as an inter-departmental transfer. It is not considered an inter-departmental sale, as the goods are not sold to an external party, nor is it an intra-departmental sale or purchase, as it involves two different departments of the same business.