Question

Difference between debtor system and stock and debtor system

Answer 1

Answer:

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Explanation:

Difference between Debtor and Stock and Debtor method -

Debtor Method :

Under this method, Head Office opens only one account for every branch in order to record all transactions relating to the branch, which is called "Branch Account". 

This method is also called synthetic system and it is generally adopted in those branches which are fairly small in size.

Branch Account is a combination of Personal Account of a branch as a debtor and Nominal Account because it is prepared to ascertain profit and loss made by the Branch Office.

Stock and Debtor Method :

This is another method of calculating profit and loss of a branch. This method is also called Analytical Method. it is an elaborate method of keeping branch accounts and is considered very useful where the branch turnover is sufficiently large and where a greater degree of control is sought to be exercised by the head office over the branch.

According to this method, instead of opening one branch account, as is done in the case of debtor method, separate accounts are opened for various transactions at branch. According to this method, a separate ledger for each branch is maintained at head office for keeping accounts such as Branch Stock Account, Branch Debtors Account, Branch Stock Adjustment Account, Goods Sent to Branch Account, Branch Profit and Loss Account, Branch Expenses Account and Branch Assets Account etc. Branch Cash or Petty Cash Accounts may sometimes be required to be maintained if the branch is permitted to use the available cash for making certain payments.  

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