Branch Accounting
BRANCH ACCOUNTING
MEANING: Branch means place of business under the same ownership.
ACCOUNTING TREATMENT: For the purpose of accounting, branches are divided into two parts. First dependant branch in which all the accounting relating to branch is done at head office.
Second independent branch in which accounting relating to branch is done at Brach only. Head office will not record branch related transactions.
DEPENDENT BRANCH: There are three methods to calculate branch profit.
1. Debtor’s method
2. Stock & Debtor’s method
3. Final account method ( Trading , P& L Account)
Debtor’s Method: under this method in the books of Head office we will prepare Branch
account in order to find out profit.
JUST CONSIDER THE FOLLOWING POINTS FOR YOUR KNOWLEDGE
Point no.1. In the above branch account only transactions in between head office and branch are recorded. All other transaction are automatically adjusted.
Point no.2. Relating to branch debtors: in the branch account we require opening balance of debtors and closing balance of debtors and cash received from debtors. In case of any of the amount is not given then we prepare memorandum Branch debtors account.
Point no.3. In order to calculate remittance we will prepare memorandum Branch cash account.
Point no.4. Branch account at Invoice price. Know difference between Cost price (mft. Cost or cost to H.O) Invoice price (sending cost or minimum s.p for branch or cost to branch) Sale Price (list price or catalogue price or maximum retail price)
Point no.5. Whenever loading information is given then all stock related entries are assumed at invoice price.
Point no.6. In case of opening stock or closing stock or G.S.T.B . is not given then we prepare Memorandum Branch stock account.
Point no.7. When branch debtors return goods directly to H.O.
Point no.8. When branch debtors sent cash directly to H.O.
Point no.9. Delhi branch sent goods to madras branch
Point no.10. Goods in transit
Point no.11. Under Debtors method no adjustment required of normal loss or abnormal loss of stock because it is adjusted in the opening and closing balance of stock. But in case some insurance claim is received then amount of claim receive will be debited to memorandum cash account.
Point no. 12. Petty cash account
Point no. 13. Imprest system: in case petty cash is maintain on imprest system it means opening balance of P. cash is equal to cl. Balance of P. cash. As a result cash received from H.O. equal to petty expenses.