What is the independent branch? How are the accounting records of such branch incorporated in the books of head office?
Answers
Answer:
Explanation:
Independent Branch, like the Head Office, keeps all its records separately and independently on Double Entry System. Dependent Branches are those with little power and depend on Head Office for their supplies and expenses and is like a Minor Son.
Independent Branches are those which make purchases from outside, get goods from Head Office, supply goods to Head Office and fix the selling price by itself Thus an independent Branch enjoys a good amount of freedom like an American Son.
Answer:
Independent Branches are those that acquire items from outside sources, receive products from the head office, deliver products to the head office, and set the selling price on their own. As a result, an independent Branch has a lot of independence, much like an American Son.
Explanation:
Independent Branch
- Independent branches are ones that are capable of managing their own finances and selling both things that are delivered by the corporate office and those that they have acquired themselves. The role of the branches grows intricate as they grow in size. Like the Head Office, Independent Branch maintains all of its records separately and independently using the Double Entry System. In such a scenario, it is desired or practical for each branch to build its own double-entry bookkeeping system under this branch accounting system, completely distinct from those of the main office. These are the branches that may also sell items to the corporate headquarters. Legally and structurally, it is a component of the foreign headquarters' business, and to some extent, it is governed by foreign headquarters
- The branches that can keep their accounts themselves and sell goods that are sent by the head office, as well as those purchased by themselves, are known as independent branches. When the size of the branches is very large their function becomes complex. Independent Branch, like the Head Office, keeps all its records separately and independently on Double Entry System. In such a situation it is desirable or practicable for each branch to establish it’s double-entry bookkeeping system quite separate from those of head office under this system of branch accounting. These are the branches which can sell the goods to the head office too. It is legally and organisationally a part of the enterprise of the foreign headquarters and to its extent subject to the law of the foreign headquarters.
- They are able to cover their own expenditures and deposit their own collection in the bank. It creates its own final accounts and trial balance. These branches are the ones that make purchases from outside sources, obtain items from the headquarters, provide commodities to the headquarters, and determine the selling price independently. At the end of the year, it simply has to deliver the trial balance and final accounts. All of the transactions, even those even registered by the central office, are recorded individually and independently by these branches. The branch calculates the profit and loss and sends it to H.O. at the end of the year. Accounts of independent branches are prepared in three steps: reconciliation, adjustment, and incorporation.
Characteristics of an Independent Branch:
- Such a Branch receives supplies from both the Head Office and other sources. It has a bank account of its own. It creates its own balance sheet, trading account, and profit and loss account. Inter-branch transactions might occur.
- To put it another way, commodities moved from one Branch to another Branch under the same Head Office. The branch creates a combined balance sheet for the H.O. and the branch.
- Like the Head Office, Independent Branch maintains all of its records separately and independently using the Double Entry System.
- Dependent Branches are weaker branches that rely on the head office for supplies and funding for costs, much like a minor son.