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Financial Accounting II - Fiac
Financial Accounting II - Fiac
FIAC
Chapter :1
Branch Accounting:
An
Introduction
Learning objectives
At the end of this lecture you will be able
to:
Understand the concept of branches
Know the differentiation between branches
and departments
Objectives of Branch Accounting
Know why and how branches are classified
from accounting point of view
Branch office
A branch is a business unit located at some distance
from the home office
A trading company may try to expand its business by
opening BRANCHES as another establishment of the
company in different locations
Branch Accounts
Departmental
Accounts
1. Maintenance of
Account
Branch accounts
may be maintained
at the branch or
head office
Departmental
accounts are
maintained at only
one place
2. Allocation of
common expenses
No allocation
problem arises since
the expenses in
respect of each
branch can be
identified
Common expenses
are distributed
among the
departments
concerned on some
equitable basis
considered suitable
in the case
3.Reconcilliation
Reconciliation of
head office and
No such problem
arises
classification of branches
Branches
Inland
Branches
Independent
branches (they
maintain
independent
accounting records)
Foreign
Branches
Dependent
branches (for which
accounting records
are maintained in
the head office)
Goods invoiced
at cost or
selling price
Debtors
Method
Stock &
Debtors
Method
Incorporation of
Branch Trial
Balance
quiz