Question

What are the objectives of keeping branch accounts? Explain how Branch Stock Account helps in keeping effective control over the branch stock.

Answer 1

There can be several branches of a company that operate at different places. These branches sale goods, buys raw material, manufactures etc. To ascertain profit/losses made by each branch, Branch accounts is made. It gives proper control over every branch as well as easy for reviewing the profitability of a particular branch. It also ensures accountability on branches, ease of calculation, ease of reporting and evaluation.
Branch Stock account is an account made to record transaction relating to stock like stock sent, returned, pilfered, sold, unsold etc. The debit side shows expenses and credit side shows gains from stock. Branch stock can be controlled with the help of this account as this reveals goods sent, goods returned, loading on opening stock, stock lost in transit, pilferage of stock, shortage of stock etc. The account also reveals profit or loss made and any abnormal rise or fall in stock is known. Thus, the level and utilization of stock at a particular branch can be effectively controlled with the help of branch stock account.