Branches and agencies can become a fundamental element for the economy and the achievement of profits for

the
main office, since they are an important means of expanding its field of operation. Explaining each of the concepts
of Agencies, Branches and Headquarters, we demonstrate their accounting records through practical cases. General
Objective Know the definition, characteristics, similarities and differences of Agencies, Branches and Headquarters
to understand the transactions and the way they are accounted for in each of them. Specific Objectives  Define the
concepts of Agencies, Branches and Headquarters.  List the similarities and differences of the Agencies and the
Branches.  Record the different transactions and records kept in the Branch and Headquarters. Agencies,
Branches and Headquarters  Companies can expand their fields of action and therefore increase their sales by
organizing agencies or branches in territories located at some distance from the main office.

Both agencies and branches have characteristics in terms of their organization, administration and control since
they are very different from each other. The credits are granted by the head office; Accounts receivable are kept in
the books of the company, which is also responsible for making collections.

Agencies  An agency is an entity, physical or moral, that carries out its activities with economic and
administrative independence from the parent company.  Distributes the products of a third party which is known
as the Head Office.  It represents an important instrument of business development and growth.  They do not
maintain inventories available to sell in the place where they are located.

Characteristics :  They distribute products from different brands and manufacturers.  They charge
commission for the goods sold.  They do not maintain inventories. They place orders, in addition to collecting
payments and sending cash to the headquarters.

Advantages:  Little investment in infrastructure.  The commission is a variable cost of sales for the Head Office.
 Rapid growth.  Lower labor costs, since they are subject to a variable salary.  They do not represent a
significant amount of fixed expenses or additional costs.

Disadvantages:  High commission payment percentage.  Loss of control.  There is no direct contact with the
client.  Larger bad customer portfolio.  Little loyalty of the agents.  It cannot be used for all types of products in
the market.

Agency Accounting Generally, agency operations, sales or purchases, are operations of the economic entity. They
are recorded jointly in the Headquarters office. The accounts must be kept separately in order to be able to know
the result by location. Agencies are one of the means that can be used so that a company can extend or increase its
sales. However, both agencies and branches have their own forms of operation to be carried out; they belong to an
independent economic entity or of which they are part. The functions of an agency are not many, they only need to
keep a cash book in which the money received from the Headquarters for its own and fixed fund and the payments
made with it for its expenses are recorded, these expenses are usually carried out by duplicate.
Branches The establishment of branches consists of creating extensions of the same company in different places
where operations are carried out for clients. The parent company needs to know the financial information, the
results of operations and the changes in the position of each of the branches that make up its company, since they
constitute an element of judgment, essential when there is a need to open or close branches, as well as to evaluate
the administration of each of them.

Characteristics for opening a branch:  Legally they are an extension of the headquarters.  Fiscally, it is
considered that the taxpayer has opened a new premises, so it is necessary to present the corresponding notice to
the Executive Directorate of Revenue.  Performs its own billing. By their nature, they have their own premises,
they generally have inventories and, depending on their characteristics, they may or may not keep their own
accounting, which must be integrated from time to time into that of the parent company. The premises and the
investments necessary for its constitution are provided by the parent company. Financial aspects :  They
generate variable costs in a lower proportion than agents, which is because they do not pay sales commissions. 
Fixed costs are higher due to investment in infrastructure. Because the total investment is provided by the parent
company, the fixed costs with which it operates are higher, which causes greater operating leverage that generates
greater risk potential at low sales volumes. At high volumes performance increases rapidly.  The financial
structure presented by the company seen as a whole is larger and firmer. Due to the amount of investment
required, the company will have more assets and, depending on their financing, will be able to present greater
financial strength. Control of points of sale. Dealing with clients is direct, that is, without intermediaries, making it
easier to detect needs and evaluate their degree of satisfaction. Due to lower fixed costs, it is possible that the
profit margin on sales is higher than when selling through agents. However, the margin of return on investment
may not be as high due to the higher investment in fixed assets.

Branches can be :

 Local  Foreign Local Branches: These are those located in the same city as the headquarters. The establishment
of this type of branches is due to the fact that sometimes it is difficult for the customer to go to the headquarters
facilities due to the distance or difficulty in reaching it. To provide better service and prevent customers from going
to competitors, branches are founded in various parts of the same city. One of the accounting advantages of this
strategy is that due to its proximity, it is possible to centralize daily in the headquarters the information generated
by each of them as well as the cash cuts. It simplifies the replacement of sold merchandise, thanks to which the
branch does not need to make direct purchases from suppliers or manage checking accounts. From a financial
point of view, this is healthy because it avoids very high balances in banks and inventories, and it also allows for
more efficient management of the company's financial resources. Headquarters may want to take control of local
branch operations as a tactic to reduce administrative costs. Sometimes and mainly motivated by the size that local
branches can reach, the parent company may decide to decentralize the administrative control of the branches by
delegating some administrative functions to each of them. In this way, the operation of branches can be much more
agile and respond to the opportunities and challenges of the environment in which they carry out their activity. In
the event that the management of the parent company decides to directly control and integrate the operational and
financial aspects of each branch into its accounting and administrative system, it must at least control the following
elements:  Merchandise in stock.  Profits or losses generated.  Other elements that you consider necessary. To
carry out this control, the parent company can establish special accounts and auxiliary records to record sales,
costs and expenses generated by the operation of each branch. In most cases, the existence of merchandise must be
evaluated at cost plus the expenses incurred to transport them to the branch, since from the point of view, the
branch is equivalent to a warehouse of the headquarters. Foreign Branches: Foreign branches are used when you
want to cover markets located outside the town where the headquarters is located. Here the branches function in a
similar way to the local ones, although the distance that separates them from the main office allows and sometimes
makes greater independence necessary. These types of branches require a cash fund for their operation, they carry
out their own control of their portfolio and sometimes make their own purchases in cases where it is more
practical to do so directly from suppliers instead of requesting remittances from the headquarters. Due to the
distance, the daily centralization of accounting information is more difficult; one solution is to communicate
through a network of computers linked by modem, another is to use the periodic sending of information through a
courier service. When the branch operations are too voluminous; This daily sending of information is not practical.
In this case, it is most convenient for the branch to have its own accounting, and send its accounting information to
the headquarters from time to time. The catalog of accounts used by the branch to record its operations must be
the same as that of the parent company since the balances of movements must be added from time to time and the
uniformity of the accounts handled simplifies this procedure. If an agency performs any of the functions of a branch
or if a branch is subject to any of the restrictions that generally apply to agencies, its accounting systems are
necessarily modified to adapt to the situation.

Both agencies and branches are means of projecting the sales organization into territory located at some distance
from the main office, but apart from these common characteristics, the agency and the branch differ greatly in
terms of organization, administration and control.

Differences between an Agency and an Agency Branch  Agencies have an assortment of samples for clients to
see, but they do not maintain stock to deliver to clients. The orders are sent to the head office and it is this that
serves them.  Credits are granted by the head office, accounts receivable are kept in the books of the head office,
which makes the collections.  The fixed fund for the agency's expenses is provided by the headquarters, which
replenishes it as it is depleted. The agencies do not handle any other cash. Branch  Branches maintain stocks of
merchandise, most of which are obtained at headquarters, but some of which may have been purchased from other
companies. Deliveries are made from the branch's stock.  Credits are granted by the branch, accounts receivable
are kept in the books of the branch, the branch makes the collections.  The collections made by the branch are
deposited in a local bank for credit to the branch, the branch manager issues the checks to pay the expenses.
According to this summary, the functions of the agency are little more or less than that of a salesman, however, the
branch performs most of the functions of an independent company, subject only to the inspection and control of
the headquarters. An agency does not need to maintain a double-entry accounting system. All you need is a cash
book in which to record the money received from headquarters for your fixed fund and the payments made with it
for your expenses. The payment record is usually kept in duplicate.

Branch Accounting Branch accounting is more complicated, they keep a complete set of books, in which they
record the merchandise received from the main office, and those acquired from other companies, sales, accounts
receivable, accounts payable. pay and expenses. The branch ledger contains an account called “HEAD OFFICE”, to
which everything that is received from the main office is credited, and everything that is sent to it is debited. The
“HEAD OFFICE” account is a capital account, which indicates the investment made by the main company in the
branch. In the main office, the account that represents the investment in the branch is the “BRANCH X” account,
which is an asset account. When the branch closes its books, it transfers the net profit from the PROFIT AND LOSS
account to that of the HEAD OFFICE, as an increase in its responsibility to the main office; while if there was a net
loss, this would be closed against the HEADQUARTERS account, charging this account with a decrease. Transfers
Between Branches If merchandise is sent from one branch to another, or if any type of asset is transferred from
one to another, the branch that makes the shipment or transfer must charge the Head Office for the amount of what
was sent or transferred; and credit to your corresponding asset account. The receiving branch must debit its
affected asset account and credit Headquarters. The head office must debit the account of the branch that receives
what was sent and credit the account of the branch that made the shipment. No branch can have an account in
another branch; since the bridge account in the branches is HEADQUARTERS. Matrix house. The parent company
must keep an accounting control of the sales, costs and, where applicable, the expenses of each agent, in order to
calculate commissions, statistical information of an administrative nature as well as other relevant data. When the
parent company decides to send merchandise to the agent, a special control must be carried out on the
merchandise on consignment, since its ownership is retained by the parent company. If the merchandise that is
sent to the agent has already been previously sold by the agent, the amount of freight, insurance and other
expenses incurred by the shipment must be considered as sales expenses. If the merchandise is sent on
consignment, the expenses related to the shipment must be considered part of the cost of the merchandise. It is
convenient to keep track of these expenses because the distance from the headquarters to the agent's home
determines a greater or lesser net profit on sales. It is uncommon for companies to use manual systems to carry
out accounting; the selection of an appropriate computer program is essential for the efficient performance of
accounting and administrative information systems. Accounting of the Headquarters The accounts used to record
the sending of cash to one of its agencies are called “Agency X Petty Cash” and to record the product samples held
by the agency, an asset account called “Samples” is managed. of Agency X¨ against ¨Shipping for the Agency¨.
Registration of expenses In the registration of expenses two particular cases may arise: 1- That the Head Office
pays the expenses that correspond to the branch. If the Headquarters at a certain time pays the expenses that
correspond to the branch, it must charge the respective expenses and credit the “Headquarters” account and in the
Headquarters an increase is recorded to the “Branch” account, making the respective debit and crediting the
decrease in “Cash and Banks” 2- That the Branch pays the expenses that correspond to the Head Office. The
Headquarters must account for the expense incurred and credit the “Branch” account to record its decrease and
the Branch debits the “Headquarters” account and credits the “Cash and Banks” account.
Conclusions:  By having one or several branches, the Head Office will realize if it is the most correct way to
diversify its products and if it is profitable to proceed to invest to obtain good economic results.  Branches carry
out their operations like a normal company, independent of the main office, they can also facilitate the completion
of many transactions such as payments, collections, among others in the name of the main office.  Every
commercial company, to be a leader in a country, must make itself known in the various parts of the territory
through the establishment of Agencies that allow it to expand the product or service to be offered to the general
public.

Detailed accounting

6. To keep good control of the agencies, it is necessary to open the following accounts: Agency working fund,
agency clients, agency sales, agency sales cost and agency sales expenses. To achieve better and greater disclosure,
it is necessary to also create the so-called agency client account. It is important to remember that the accounts
described above belong to the parent company and that only for control purposes the word agency or agent will be
added to them, this does not mean say that they belong to the agency's accounting. The Agency's Working Fund
account is a debtor account, which represents the nominal value of the fund delivered to the agency at the
beginning of the fiscal year and during the fiscal year it is credited by the value of the expenses paid by the agency.
Its presentation in the balance sheet is within the group of circulating assets, since it is part of cash and since it is a
fund with formal restrictions regarding resource or purpose, it must be shown separately. ACCOUNTING OF THE
HEAD OFFICE The parent company must maintain accounting control of the sales, costs and, where applicable, the
expenses of each agent, in order to calculate commissions, statistical information of an administrative nature as
well as other administrative data. relevance. This control can be carried out through the accounts called cost of
sales of agencies or agents, sales expenses of agencies or agents and sales of agencies or agents. Each of these
accounts must have a sub-account for each agency or agents. To control inventories, the perpetual inventory
procedure can be used. When the parent company decides to send merchandise to the agent, a special control must
be carried out on the merchandise on consignment, since its ownership is retained by the parent company. If the
merchandise that is sent to the agency or agent has already been previously sold by it, the amount of freight,
insurance and other expenses incurred by the shipment must be reasoned as sales expenses.

7. If the merchandise is sent on consignment, the expenses related to the shipment must be considered part of the
cost of the merchandise. It is convenient to keep track of these expenses because the distance from the
headquarters to the agent's address determines a greater or lesser net profit on sales. The entries to be made by
the parent company will depend on whether management wishes to determine net profits. Branches They are local
distribution centers that function as separate commercial units, although they are always subject to the authority
of the main house or office, which is the entity that determines the degree of independence that will be granted to
each branch. The general rules and procedures of the Company itself will always be the same as those applied in
the branches, but all the authority required for the administration of its own operations can be delegated to them.
The results of the branches' operations will be evaluated in accordance with their Financial Statements. Branches
can sell or provide the service, invoice, handle cash received to pay their own purchases or expenses. The branches
create summary financial statements called “Combined Statements”, or “Combined Drafts”, which are drafts to
demonstrate the joint situation of the branch and the Headquarters. These drafts are extra-books. The main
characteristics of the branches are: 1. They do not have legal personality 2. They have merchandise for sale (from
the Headquarters or other companies) 3. They sell directly (grant credit, and make their own collections) 4.
Manage your money (make your own payments) 5. Keeps accounting books (they have an accounting system) 6. It
has no share capital. There are 2 types of branches in which we have: Local Branches: These are those that are
located in the same city as the parent company. The establishment of this type of branches is due to the fact that
sometimes it is difficult for the client to go to the headquarters facilities due to the distance or

8. difficulty reaching it. To provide better service and prevent customers from going to competitors, branches are
founded in various parts of the same city. One of the accounting advantages of this strategy is that due to its
proximity, it is possible to centralize daily in the headquarters the information generated by each of them as well
as the cash cuts. It simplifies the replacement of sold merchandise, thanks to which the branch does not need to
make direct purchases from suppliers or manage checking accounts. From a financial point of view, this is healthy
because it avoids very high balances in banks and inventories, and it also allows for more efficient management of
the company's financial resources. Foreign Branches: Foreign branches are used when you want to cover markets
located outside the town where the headquarters is located. Here the branches function in a similar way to the
local ones, although the distance that separates them from the main office allows them and sometimes makes it
essential for greater independence. Branch accountingThe branch accounting systems contemplate the following
possibilities: a. Centralized Records in the Main Office: In this case the transactions of the branch are recorded in
the books of the main office or in a separate book. The branch must send all documentation daily, or reports that
sufficiently detail sales, collections, purchases, expenses, etc. b. Separate registration in the Main Office and in the
Branch: In this case the branch keeps its own books and maintains a constant information system with the Main
Office. Regarding certain operations that affect the accounting of the two units and, at the end of a previously
established period, the branch sends its Financial Statements to the main office so that it can review them and
make the definitive record of the results obtained by the branch. This is the most used system.

9. When the branch keeps its own books, it will open an account that will be called the Main Office Account; It takes
the place of the Capital account of any company. To this account, all remittances received from the headquarters
and the profits obtained at the Branch will be credited. On the other hand, all remittances of funds made by the
branch to the headquarters and losses in its operations will be debited. The balance of the Main Office Account will
also be kept in a reciprocal account, in the accounting of the Main Office, which will be called Branch, conveniently
identified, in which all its contributions to the branch and the profits that are notified by it will be charged. . On the
other hand, all the remittances you receive from the branch and the losses that the branch communicates to you
will be credited to this account. Differences between Agency and Branch Agencies: 1. They have an assortment of
samples for customers to see, but they do not keep stock to deliver to customers. The orders are sent to the head
office and this is the one that serves them. 2. The credits are granted by the parent company, the accounts
receivable are recorded in the books of the parent company, the latter makes the collections. 3. The fixed fund for
the agency's expenses is provided by the parent company, which replenishes it as it is depleted. The agency does
not handle any other cash. Branch offices. 1. Maintains stocks of merchandise, most of which are obtained at
headquarters, but some of which may have been purchased from other entities. Deliveries are made from the
branch's stock. 2. The loans are granted by the branch; accounts receivable are kept on the branch's books; It
makes the payments. 3. The collections made by the branch are deposited in a local bank so that they can be
credited to it; The branch manager writes checks to pay expenses.

10. An agency performs the same functions, but more or less, as a salesman, while the branch performs most of the
functions of an independent company, subject only to the inspection and control of the parent company. Although
there are agencies and branches, there are other establishments that have some of the characteristics of both.
Agencies that perform some of the functions of branches, and branches subject to some restrictions that apply to
branches. If an agency performs any of the functions of a branch or if a branch is subject to any of the restrictions
that generally apply to agencies, its accounting systems are necessarily modified to adapt to the situation. Agencies
and Branches according to IFRS In what has to do with agencies and branches, IFRS is referred to in IAS 14, which
is segmented accounting information and which has two parts: The first is the segmentation of the business which
is defined as an identifiable component in a company that supplies a product or service or a group of them that is
related to and subject to the risks and returns of another group of segments. The second is segmentation by
geographic space, defined as an identifiable component of a company that supplies goods and services within a
specific economic environment. It should also be taken into account that when a company has a branch, and must
present consolidated financial statements (IAS 27), it mentions that the main office is the one that must prepare
these financial statements, preparing them using uniform accounting policies for transactions. When preparing the
consolidated financial statements, the entity will combine the financial statements of the parent company and its
subsidiaries by line, adding the items that represent assets, liabilities, equity, income and expenses of similar
content, in order to present the financial information of the group, as if It was a single economic entity.

11. And finally, the intragroup balances, transactions, income and expenses will be eliminated in their entirety. IAS
31 deals with participation in joint businesses, addressing agencies to a certain extent as far as the activities
carried out in the joint business are concerned; collective investment institutions, such as investment funds or
other similar entities, and as is well known, an agency uses funds from the parent company for its operation. The
operation of a joint venture sometimes involves only the use of assets and other resources of its participants, and
not the formation of a joint stock company, business association or other entity, or the establishment of a financial
structure independent of the participants. . Legal Bases. Depending on the corporate form adopted by the branch
and if it is decided that they have their own legal personality, they must comply with the provisions provided for in
the Commercial Code; That is, if it adopts the form of a company in a collective name or in a simple partnership, it
must comply with the same requirements established for national companies: constituent document, registration,
etc. If the form adopted is a joint-stock company, it must be registered in the Commercial Registry of the place
where the agency or operation is located, and it will publish in a local newspaper the social contract and other
documents necessary for the constitution of the company, likewise, it will accompany it for filing in the voucher
notebook, the company statutes. Taxes that must be honored: 1. LISLR: Income Tax Law. 2. VAT: Value Added Tax
Law. 3. LOCTISEP: Organic Law against illicit trafficking and consumption of narcotic and psychotropic substances.
4. LOCTI: Organic Law of Science, technology and Innovation. 5. Municipal Tax: These include: fees for the use of
your goods or services; administrative fees for licenses or authorizations; taxes on economic activities of
industries, commerce and services; taxes on urban real estate, vehicles.

12. 6. Other considerations: Obtaining the Single Registry of Fiscal Information (RIF) before the national integrated
tax and customs administration service (SENIAT). In the commercial code it is stipulated in the following articles.
Article 3. Merchants are considered to be: I. People who, having the legal capacity to engage in commerce, make it
their ordinary occupation; II. Companies incorporated in accordance with commercial laws; III. Foreign companies
or their agencies and branches that carry out commercial activities within the national territory. Article 15.
Companies legally incorporated abroad that are established in the Republic, or have an agency or branch there,
may carry out commerce, subjecting themselves to the special requirements of this Code in everything that
concerns the creation of their establishments within the national territory, their operations. commercial laws and
to the jurisdiction of the courts of the Nation. Regarding their capacity to contract, they will be subject to the
provisions of the corresponding article of the title of "Foreign Companies." Article 17. Merchants have a duty. YO.
To participate in the opening of the establishment or office of their property, by the means of communication that
are suitable, in the places where they have domicile, branches, relationships or commercial co-responsors; This
information will reveal the name of the establishment or office, its location and purpose; If there is a person in
charge of its administration, their name and signature; If there is a company, its nature, the indication of the
manager or managers, the company name or denomination and the person or persons authorized to use one or the
other, and the designation of the offices, branches or agencies, if any; II. To report, in the same way, the
modifications suffered by any of the aforementioned circumstances. III. (It is repealed).

13. Article 230. If in the constitutive act of the company only one or some of the partners have been authorized to
act and sign for it, only their signature and their acts under the company name bind the company. Any partner
whose name is included in the company name is authorized to deal with and bind the company. The limitations
established in the powers of the managing partner have no effect with respect to third parties. When the limitation
of powers is that of the administration of an agency or branch, the provisions of article 95 apply. In the absence of a
special provision in the partner contract, it is understood that all partners have the power to act and sign for the
company. Article 354. Companies incorporated in a foreign country, which have the main object of their
exploitation, commerce or industry in the Republic, will be considered national companies. Companies that are
also incorporated in a foreign country only have branches in the Republic, or operations that do not constitute
their main purpose, retain their nationality, but will be considered domiciled in Venezuela. Both companies,
whether they are in a collective name or in a simple limited partnership, must comply with the same requirements
established for national companies; and if they are joint stock companies, they must be registered in the Commerce
Registry of the place where the agency or operation is located, and They will publish in a local newspaper, the
social contract and other documents necessary for the constitution of the company, in accordance with the laws of
their nationality, and a duly legalized copy of the articles referring to those laws. They will also include the
company's statutes for filing in the receipt notebook.

LEGAL ASPECTS.

Tax Code in Art. 96 says: "When taxable persons have branches, establishment or agency that together with the
parent company form a single entity or legal person, they must submit a single tax declaration and compile the
data in a consolidated manner, without prejudice to the Tax Administration being able to request information
disaggregated by agency, branches, establishment or cost centers.”

3. Tax law on the transfer of personal property and the provision of services. Responsibility of parent company and
branches. When the taxpayer carries out its activities through a local parent company with branches or agencies,
the capacity and responsibility as a taxpayer will be based in the company. matrix.

ACCOUNTING FOR BRANCHES AND AGENCIES.BRANCHES

In branch accounting, a capital account does not appear, but rather an account called “Headquarters, Investment
Account" that shows the amount of investments made by the parent company in the branch. In the parent
company's accounting, the account “Branch Branch” must be opened. , Current account". The movement of the
aforementioned accounts is detailed below: Branch, Current Account Debited: Credited: - At the beginning of the
year: - During the year: - With the amount of its balance - With the nominal value of the cash remittances that the
debtor, which represents the branch, makes to the Parent. net investment of the parent company in the branch. -
With the value of the merchandise - During the year: that the branch returns or - With the amount of the value sent
to the parent company. nominal amount of cash that the parent - With the value of the payments sent to the
branch. made to the branch by - With the value of the price of the order and account of the parent company
merchandise that the parent company sends to the branch.

4. - At the end of the year: - With the value of the payments - With the value of the loss made by the parent
company net of the year obtained on behalf of the branch. By the branch. - At the end of the year: - With the value
of the net profit for the year obtained by the branch. Balance: Its balance is debit and represents the value of the
investment that the parent company made in the branch, added, (decreased) from the profit Net (loss) for the year,
obtained by the branch. Presentation: Because this account records the investment of the parent company in the
branch, which includes cash, merchandise, movable and immovable property, equipment, etc. We will present it in
the general balance sheet in the non-current assets. In the branch's accounting, an account called: Headquarters,
Investment Account must be opened. It is debited: It is paid: - During the year: - At the start of the year: - With the
nominal value of the - With the value of its credit balance, cash remittances that represent the net investment of
the Branch send to the parent company. The headquarters in the branch. - During the year: - With the value of the
merchandise, - With the nominal value of the cash,
5. That the branch returns or That the parent company sends to the branch. refer to the matrix. - With the value of
the price of the goods that the parent company sends to third parties on behalf and by order of the branch. matrix. -
At the end of the year: - At the end of the year: - With the value of the net profit for the year obtained by the branch.
- With the value of the net loss for the year obtained by the branch. Balance: Its balance is credit and represents the
value of the investment that the parent company made in the branch, added (decreased) from the net profit (loss)
for the year, obtained by the branch. Presentation: Because this account records the investment of the parent
company in the branch, which includes cash, merchandise, personal and real property, equipment, etc. That is, the
net investment in the branch will be presented in the general balance sheet in the section that would correspond to
the stockholders' equity. Note: The application of these accounts is reflected in the practical case. ACCOUNTING
FOR AGENCIES. The accounting of the agencies is independent because they have legal status, as well as economic
and administrative independence. The agency and the parent company are related in the sense that agreements
may exist between them, in which the parent company transfers the exclusivity of a good or service to the agency.
Some examples of agencies in our environment are: travel agencies, beverage deposit companies, etc.

6. A peculiarity of sales agents is that their activity is based on a commission in relation to the goods sold. Note: the
accounting records for the agency are not reflected in this case because it is equal to the costs of the parent
company. GOODS TREATED AT COST PRICE. This case occurs when the parent company sends merchandise to the
branch, which has to be registered by the parent company and the branch at cost price, to satisfy the needs of the
market it serves. For greater understanding, see item N ° 3 of the branch accounting of the practical case. GOODS
PROCESSED AT A PRICE OTHER THAN THE COST. This method is sometimes used so that the branch manager does
not know the cost of the goods sold and, consequently, they will not know the profits of lasucursal.APPLICABLE
INTERNATIONAL ACCOUNTING STANDARDS 1 AND 2.Standard 1: Presentation of Financial
Statements.Balance:Identification of the financial statements.Paragraph 46: In addition, the data that follows must
be recorded in a prominent place, and will be repeated as many times as necessary to a correct understanding of
the information presented: a) The name or other type of identification of the company that presents the
information. b) If the financial statements belong to an individual entrepreneur or a group of companies.

7. c) The closing date or the period of time covered by the financial statement, as appropriate based on its nature.
d) The currency in which the information is presented. e) The level of precision used in the presentation of the
figures in the financial statements. The company has made the distinction regarding the presentation of its current
and non-current assets and liabilities, according to paragraph: 53, 57, 58, 60 and 63 (see page 64). Information to
be disclosed within the body of the balance sheet. Paragraph 66: At a minimum, the body of the balance sheet must
include lines with the amounts corresponding to the following items: a) Property, plant and equipment c) Financial
investments (excluding those mentioned in the sections d and g).e) Inventoriesf) Trade debtors (customers)g)
Cash and cash equivalentsh) Accounts payable (tax payable)j) Provisionsn) Issued capital and reserves

8. Income statement: IAS 1: Presentation of financial statements. Information to be disclosed in the body of the
income statement. Paragraph 75: At a minimum, the body of the income statement must include lines with the
amounts that correspond to the following items :a) Incomeb) Results of operatione) The cost of income tax i)Net
profit or loss for the periodParagraph 82: The classification of expenses has been made based on the cost of
sales.IAS 2: InventoriesDisclosure information:Paragraph 34: The following information must be disclosed in the
financial statements: c- The book value of inventories that have been measured using the net realizable value. Net
Realizable Value: It is the estimated selling price of an asset in the normal course of operation. , less the estimated
costs to complete its production and those necessary to carry out its sale.