What are the three systems of maintaining the accounts of a dependent branch and describe how is profit ascertained under each system? Explain how branch stock account helps in keeping effective control over the branch stock ?
Answers
Answer:
The accounts of the dependent branch are maintained by the Head Office in any one of the following ways;
1. Debtors System
2. Stock and Debtors System
3. Final Account System
4. Wholesale Branch System
1. Debtors System:
Under this system the Head Office opens one Branch Account to record various transactions with the Branch. Branch Account is maintained in the form of a Debtor Account. In the books of the Head Office, Branch Account is debited with the goods supplied and all expenses met by Head Office and credited with all remittances and returns, similar to Customers Account.
Therefore, the system can be called Debtors System or One Account System. The excess of the credit over its debit represents a profit or vice-versa, and is transferred to General Profit and Loss Account of Head Office. Branch Account is prepared in the books of Head Office and is a Nominal Account.
Answer:
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Explanation:
The accounts of the dependent branch are maintained by the Head Office in any one of the following ways;
1. Debtors System
2. Stock and Debtors System
3. Final Account System
4. Wholesale Branch System
1. Debtors System:
Under this system the Head Office opens one Branch Account to record various transactions with the Branch. Branch Account is maintained in the form of a Debtor Account. In the books of the Head Office, Branch Account is debited with the goods supplied and all expenses met by Head Office and credited with all remittances and returns, similar to Customers Account.
Therefore, the system can be called Debtors System or One Account System. The excess of the credit over its debit represents a profit or vice-versa, and is transferred to General Profit and Loss Account of Head Office. Branch Account is prepared in the books of Head Office and is a Nominal Account.
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