what is branch memorandum account?
Answers
Answer:
stock account has to be prepared
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
ADVERTISEMENTS:
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.
ADVERTISEMENTS:
From the accounting point of view, the following are the further classifications:
(a) Branches receive goods from Head Office at cost price and are authorised to sell them for cash only.
(b) Branches receive goods from Head Office at cost price and are authorised to sell them for cash as well as on credit.
(c) Branches receive goods from Head Office at cost plus certain percentage.
(A) Branches Received Goods from Head Office at Cost Price and are Authorized to Sell them for Cash only:
ADVERTISEMENTS:
The following journal entries are passed in the books of the Head Office for recording different Branch transactions: