Question

4) Under Stock and debtors system general income is credited to

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Answer 1

Under the Debtors System, the profit or Joss can be found out by preparing a Branch Account in the books of Head Office. The Branch Account has been treated as a customer, a personal account in an impersonal name. This type of accounting treatment works well in small Branches. When authorised to make credit sales also, the Debtors System proves inadequate. A detail of credit sales remains unaccounted in this system. To overcome this, Stock and Debtors System has been devised.

Under Stock and Debtors System, the Head Office maintains several accounts relating to each Branch.

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