What do you understand by branch accounting? What are its
purposes?
Answers
Answer:
Branch accounting is a bookkeeping system in which separate accounts are maintained for each branch or operating location of an organization. ... However, branch accounting usually refers to branches keeping their own books and later sending them into the head office to be combined with those of other units.
☞ᴡʜᴀᴛ ɪs ʙʀᴀɴᴄʜ ᴀᴄᴄᴏᴜɴᴛɪɴɢ﹖
Branch accounting is a bookkeeping system in which separate accounts are maintained for each branch or operating location of an organization. Typically found in geographically dispersed corporations, multinationals, and chain operators, it allows for greater transparency in the transactions, cash flows, and overall financial position and performance of each branch.
Branch accounts can also refer to records individually produced to show the performance of different locations, with the accounting records actually maintained at the corporate headquarters. However, branch accounting usually refers to branches keeping their own books and later sending them into the head office to be combined with those of other units.
☞ᴡʜᴀᴛ ᴀʀᴇ ɪᴛs ᴘᴜʀᴘᴏsᴇs﹖
The primary advantages (and often, the objectives) of branch accounting are better accountability and control since the profitability and efficiency of different locations can be closely tracked.
The primary advantages (and often, the objectives) of branch accounting are better accountability and control since the profitability and efficiency of different locations can be closely tracked.On the downside, branch accounting may involve added expenses for an organization in terms of manpower, working hours, and infrastructure. A separate account coding structure must be maintained for each operating unit. It may be necessary to appoint branch accountants to ensure accurate financial reporting and compliance with head office procedures and processes.