DIFFERENCE BETWEEN DEPARTMENTAL AND BRANCH ACCOUNTING

The difference between Departmental and Branch Accounting is as follows:

DEPARTMENTAL ACCOUNTING

Departmental Accounting refers to maintaining accounts for one or more departments of the company. Revenues and expenses of the department are recorded and reported separately. The departments are then consolidated into the accounts of the head office to prepare the financial statements of the company.

A department is defined as a part with the special or allocated duty/ function or area of activity.

EXAMPLE: A Textile mill which is having head office and factory. Separate accounts are maintained for production facilities and then the final results are sent to head office which is then incorporated by head office in their accounts.

Thus, a departmental accounting system is an accounting information system that records the activities and financial information about the department.

BRANCH ACCOUNTING

Branch Accounting means recording of business transactions of a branch for the purpose of calculating its profit or loss for an accounting period.

KEY DIFFERENCES

The difference between Departmental and Branch Accounting is as follows:

BASIS OF DIFFERENCE	DEPARTMENTAL ACCOUNTING	BRANCH ACCOUNTING
LINKAGE	Departments are attached with the main organization under a single roof.	Branches are separate from the main organization.
RESULTS OF	Departments are the results of fast human life.	Branches are the outcomes of the tough competition and expansion of the business.
GEOGRAPGICAL LOCATION	Departments are not geographically separated.	Branches are geographically separated.
TYPES	There is no classification of departments.	The branches may be dependent or independent.
ALLOCATION OF EXPENSES	Allocation of departmental common expenses is a tough job.	There is no need of allocation of branch expenses.
RECONCILIATION	In departmental accounts, no reconciliation is required because there is no central account division.	To find out the net result of organization the reconciliation of different branch is a main job.
TRADING	Departmental trading with their head office is conducted under the same roof although each department deals with separate line of activity.	Branch trading is conducted in different parts of the country under the head office dealing with usually the same line of activity.
PRFOITABILITY	The profitability position of department is seen within the larger picture of a parent organizational profits.	The profitability of each branch is equally important and seen separately.
METHODS OF PREPARATION OF ACCOUNTS	There are only two methods: Separate set of books are maintained Separate set of books are not maintained.	There are various methods of preparation of accounts like Stock and debtors system Debtors system Final accounts system Wholesale price system
ACCOUNTS MAINTAINED	The accounts maintained are; Departmental trading and profit and loss account General profit and loss account	The accounts maintained are: Branch stock account Branch adjustment account Branch debtors account Branch expenses account
FUNCTIONAL DIVISION	Functional division is possible in case of departmental concerns.	It is not possible in case of branch.
CONTROL	The chief executive who is to keep a constant watch over the department supervisor closely and supervises effectively.	Control is unpracticable in case of a far off branch since it is not possible for the head office to keep instant watch.
RECONCILIATION OF RESULTS	Departmental accounting presents the trading results of each individual department.	Branch accounts present the trading results of each individual branches.
NATURE	Departmental accounting is practically a segment of accounts.	Branch accounts are a condensation of accounts.
EXPENSIVE	These are comparatively less costly as a small team of accountants can be appointed to maintain the accounts.	Branch accounts are costly to maintain as it involves a big team of accountants to maintain accounts for each branch.

Also Study	Also Study	Also Study	Also Study
Accounting	Non profit organisation	Depreciation	Liquidity ratios
Nature of Accounting	Receipts and Payments Account	Depreciation Accounting	Acid Test Ratio
Benefits of Accounting	Scope of accounting	Hire Purchase Accounting	Cash Ratio
Difference between cost accounting and financial accounting	Financial accounting, cost accounting and management accounting	Difference between hire purchase and instalment system	Financial ratio analysis
Difference between transaction and event	Transactions	Users of Accounting	Ratio analysis
Limitation of Accounting	Capital Expenditure	Instalment System	Difference between consignment and sale
Book Keeping	Revenue Expenditure	Reserves Accounting	Abnormal loss vs normal loss in consignment
Accountancy	Difference between capital and revenue expenditure	Provisions	Treatment of loss on consignment
Accounting as science or an art	Accounting Equation	Single entry system	Accounting treatment of consignment
Book Keeping vs accounting	Deferred Revenue Expenditure	Difference between statement of affairs and balance sheet	Joint venture vs consignment
Book keeping vs accountancy	Capital receipt	IFRS	Departmental Accounting
Accounting vs accountancy	Revenue receipt	Balance Sheet	Methods of departmental accounting
Basis of Accounting	Difference between capital and revenue receipt	Profit and loss Account	Allocation of expenses in departmental accounting
Branches of accounting	Difference between accounting concepts and conventions	Trading Account	Inter-departmental transfers
Cash and mercantile system of accounting	Accounting Standards	Voyage Account	Different types of branches
Accounting Principles	Objectives of Accounting	Accounting for Incomplete Voyage	Departmental vs Branch accounting
Golden ru les of accounting	Process of Accounting	Joint venture	Methods of branch accounting
Double entry system of book keeping	Scope of Accounting	Joint Venture Vs Partnership	Incorporation of branch trial balance
Double entry vs Single entry system	Accounting Concepts vs Accounting conventions	Methods of recording transactions in Joint Venture	Garner VS Murray Rule
History of Accounting	Difference between provisions and reserves	Consignment