Part I.

Multiple Choice – Theories (Guerrero & Peralta, 2013)

1. A home office’s Investment in Branch account is a(n):
a. Asset
c. Unrealized income
b. Contra liability
d. Liability
2. When an asset is transferred to a branch from the home office, which of the following
occurs?
a. Only a memo entry is made
b. A credit to Home Office account
c. A debit to Home Office account
d. A credit to Investment in Branch account
3. Which of the following is not a reciprocal account?
a. Home office account
c. Inter-company transactions
b. Investment in Branch
d. Investment in subsidiary stock
4. Which of the following statements is incorrect regarding branch accounting?
a. A branch’s Home Office account appears in the asset section of a balance sheet
prepared by the company as a whole
b. A branch’s Home Office account appears in the equity section of the branch’s
separate balance sheet
c. Most branches maintain a complete set of books which includes a self- balancing set
of accounts
d. Sales agencies usually do not keep a complete self-balancing set of accounts.
5. In the separate statement of financial position of the branch, the home office account
shall be presented as
a. Liability
c. Asset
b. Equity
d. Income

Part I. Multiple Choice – Theories (Guerrero & Peralta, 2013)

1. A home office’s Investment in Branch account is a(n):
a. Asset
c. Unrealized income
b. Contra liability
d. Liability
2. When an asset is transferred to a branch from the home office, which of the following
occurs?
a. Only a memo entry is made
b. A credit to Home Office account
c. A debit to Home Office account
d. A credit to Investment in Branch account
3. Which of the following is not a reciprocal account?
a. Home office account
c. Inter-company transactions
b. Investment in Branch
d. Investment in subsidiary stock
4. Which of the following statements is incorrect regarding branch accounting?
a. A branch’s Home Office account appears in the asset section of a balance sheet
prepared by the company as a whole
b. A branch’s Home Office account appears in the equity section of the branch’s
separate balance sheet
c. Most branches maintain a complete set of books which includes a self- balancing set
of accounts
d. Sales agencies usually do not keep a complete self-balancing set of accounts.
5. In the separate statement of financial position of the branch, the home office account
shall be presented as
a. Liability
c. Asset
b. Equity
d. Income