Difference between branch account and department account
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Answer:
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.
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