1. Which one of the following is not true about a dependent branch?
a) These branch sell only those goods which are received from the head office
b) All expenses of the branch are paid by the head office.
c) Petty expenses are paid by the branch and petty cash account is prepared at the branch
either as simple petty cash or on imprest system
d) Such department maintain their own books of account.
2. When goods are invoiced to branch at invoice price, the value of goods is adjusted by
a) Debiting Goods sent to branch account
b) Debiting Branch Adjustment Account
c) Debiting Stock reserve account
d) Debiting Branch account
3. In case of a dependent branch ‘Branch fixed Assets A/c’s are maintained by:
a) Branch
b) Head office
c) Department
d) None of the above
4. When Branch ‘A’ sends goods to Branch ‘B’, in the books of Branch ‘A’, debit is given to
a) Head office A/c
b) Branch ‘B’ A/c
c) Both HO A/c and Branch A/c
d) No entry
5. The Fixed assets accounts of are maintained by the head office, then
a) No entry is passed by the branch for depreciation on fixed assets
b) Branch account is debited and fixed assets is credited in the books of head office for
depreciation
c) Depreciation account is debited and head office account is credited in the books of branch
6. Which one of the following is not true about independent branch?
a) These branches can purchase goods from open market
b) They maintain complete set of double entry system
c) They also maintain head office account.
d) They do not charge depreciation on fixed assets.
7. Departments are located in:
a) Same place
b) Another city
c) Outside state
d) Foreign country
Answers
ANSWER :
1. (d) Such department maintain their own books of account.
- ✠ "Such department maintain their own books of account" is not true about a dependent branch.
✎ Dependent branches sell only those goods which are received from the head office. All expenses of the branch are also paid by the head office. Petty expenses are paid by the branch and petty cash account is prepared at the branch either as simple petty cash or on imprest system. Moreover, accounts of such branches are maintained by head office.
- ★ Therefore, the correct option is "(d) Such department maintain their own books of account".
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2. (a) Debiting Goods sent to branch account.
- ✠ When goods are invoiced to branch at invoice price, the value of goods is adjusted by "Debiting Goods sent to branch account."
✎ The head office may send goods to branch at cost price or at invoice price (selling price). When goods are invoiced to branch at invoice price, the net value of goods sent to branch is adjusted by debiting Goods sent to branch account and crediting the branch account.
- ★ Therefore, the correct option is "(a) Debiting Goods sent to branch account".
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3. (b) Head office.
- ✠ In case of a dependent branch ‘Branch Fixed Assets A/c’s are maintained by "Head office".
✎ In case of a dependent branch, all the accounts are maintained by the head office. Branch Fixed Assets A/Cs are also maintained by the head office in case of such branches.
- ★ Therefore, the correct option is "(b) Head office".
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4. (a) Head office A/C.
- ✠ When Branch ‘A’ sends goods to Branch ‘B’, in the books of Branch ‘A’, debit is given to "Head office A/C".
✎ Sometimes, goods may be transferred by one branch to another branch. In such case, at the time of passing entry for transfer in branch, it should be treated as a transfer to head office (though the goods is actually transferred to a particular branch) and similarly for receiving branch, it will be treated as received from head office (though the goods is actually received from another branch).
- ★ Therefore, the correct option is "(a) Head office A/C".
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5. (b) Branch account is debited and fixed assets is credited in the books of head office for depreciation.
- ✠ The Fixed assets accounts of are maintained by the head office, then "Branch account is debited and fixed assets is credited in the books of head office for depreciation".
✎ When the head office maintained the Fixed Assets Accounts of branches, then for the purpose of charging depreciation, Branch Account is debited and Branch Fixed Assets Account is credited.
- ★ Therefore, the correct option is "(b) Branch account is debited and fixed assets is credited in the books of head office for depreciation".
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6. (d) They do not charge depreciation on fixed assets.
- ✠ "They do not charge depreciation on fixed assets" is not true about independent branch.
✎ Independent branches can purchase goods from open market and they maintain complete set of double entry system as well as also maintain head office account. Along with this. such branches need to charged depreciation on fixed assets.
- ★ Therefore, the correct option is "(d) They do not charge depreciation on fixed assets".
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7. (a) Same place.
- ✠ Departments are located in "Same place".
✎ A branch may have various departments. These departments of branch are located in the same place where the branch is situated. However, the branches may locate in different places i.e., in home country or in foreign country.
- ★ Therefore, the correct option is "(a) Same place".