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DIFFERENT TYPES OF BRANCHES

Posted on September 29, 2019 By commerceiets No Comments on DIFFERENT TYPES OF BRANCHES

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  • DIFFERENT TYPES OF BRANCHES
    • DIFFERENT TYPES OF BRANCHES
      • DEPENDENT BRANCHES
      • FEATURES OF DEPENDENT BRANCHES
    • INDEPENDENT BRANCHES
      • FEATURES OF INDEPENDENT BRANCHES

DIFFERENT TYPES OF BRANCHES

Branches are the various divisions of business located in different places either in the same town or in different towns. Main business house can be called Head Office which controls the affairs of the branches. Branches may be opened for the purchase of raw materials, production of goods, purchase of goods, sale of goods or for rendering after sale services to the customers. The different types of branches are dependent or independent.

DIFFERENT TYPES OF BRANCHES

DEPENDENT BRANCHES

Dependent branch is a branch which does not maintain its own set of books. All records have to be maintained by the head office.

FEATURES OF DEPENDENT BRANCHES

DOES NOT MAINTAIN OWN SET OF BOOKS: The dependent branch does not maintain its own set of books. The Head Office maintains a record of all the transactions. The branch only maintains a Debtor’s Ledger and a Stock Ledger. The Debtor’s ledger is maintained to find out the money due from debtors of the branch is authorized to sell goods on credit. The stock ledger is maintained to get information regarding the movement of the goods received from the head office and the balance of stock in hand.

SUPPLY OF GOODS FROM HEAD OFFICE ONLY: Generally, all the goods are supplied to the branch by the Head Office. Sometimes the branch may be allowed to make purchases from the local parties for which the payment is made by the Head Office directly.

REMITTANCE OF RECEIPTS TO HEAD OFFICE: Cash received from the branch from its debtors on account of cash sales, is daily remitted to the head office. An account of head office is opened in a local bank where all the cash collections are deposited by the branch.

REMITTANCES OF EXPENSES: All the expenses of the branch are directly financed by the Head Office through cheques or cash. The branch submits the summary to the head office for payments to be made by it during a particular period in respect of Branch expenses.  

MAINTENANCE OF PETTY CASH BOOK: The branch is authorized to make a petty cash book either a simple book or on imprest system. For this, the cash is supplied by the head office periodically.

METHODS TO MAINTAIN ACCOUNTS: For dependent branches, the accounts are maintained in any of the following ways:

  • Branch Account System or Debtors System
  • Stock and Debtors System
  • Final Accounts System
  • Wholesale Branch

INDEPENDENT BRANCHES

An independent branch is a branch which can make purchases at its own and maintain the whole set of books of accounts. These branches purchase goods from other suppliers for sale. At the end of the year, the trial balance is made and sent to the head office.

FEATURES OF INDEPENDENT BRANCHES

INDEPENDENT TRADING: Independent branches are authorized to independent trading. These branches make purchases at its own and make sales.

OWN SET OF BOOKS ARE MAINTAINED: The independent branches make their own set of books. The books are kept on the double entry system. The journal, ledger, subsidiary books are maintained of each branch separately. At the end of the year, only the trial balance prepared is sent to the head office to make the consolidated accounts of whole business.

MAINTENANCE OF BRANCH ACCOUNT: In case of Independent Branches, the branch account is opened. This account is debited with the cash or goods sent to branch. It will get credit when cash is received by the head office from the branch. It is maintained like personal account and it indicates the amount due by the branch to the head office.

MAINTENANCE OF HEAD OFFICE ACCOUNT: In the books of the branch, the ‘Head Office Account’. This account is debited with the amount remitted by the branch to the head office and get credited in respect of goods received by the branch from the head office, cash received and expenses paid by the head office on behalf of the branch. This account appears as the liability in the branch balance sheet.

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AccountancyDifference between capital and revenue expenditureProvisions Treatment of loss on consignment
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Book keeping vs accountancyCapital receiptIFRSDepartmental Accounting
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Double entry vs Single entry systemAccounting Concepts vs Accounting conventionsMethods of recording transactions in Joint VentureGarner VS Murray Rule
History of AccountingDifference between provisions and reservesConsignment
CONNECT ON LINKEDIN
DIFFERENT TYPES OF BRANCHES
DIFFERENT TYPES OF BRANCHES
FINANCIAL ACCOUNTING Tags:DEPENDENT BRANCHES, INDEPENDENT BRANCHES

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