Understanding Independent Branches in Accounting
Independent branches in accounting operate autonomously, making purchases externally, receiving goods from the head office, setting their selling prices, and managing expenses from their own cash flow. They keep complete books, prepare financial statements independently, and may engage in inter-branch transactions. Entries in the head office books involve incorporation of branch transactions, assets, liabilities, and more. Specific entries cover goods and cash in transit, transferring assets between branches, and depreciating fixed assets.
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BRANCH ACCOUNTS- INDEPENDENT BRANCHES II B.Com Prithvishri G. Shetty
MEANING: Independent which make purchase from outside, get goods from head office, supply goods to head office, fix the selling price by itself, pay the expenses from the cash realized and deposit cash in their own account. Branches are those
FEATURES OF INDEPENDENT BRANCH Keeps a complete set of books . Prepares its own Trial balance, Trading and Profit and loss account and Balance sheet. Need not depend on the head office. Need not remit the money to the head office periodically. There may be inter-branch transactions.
INCORPORATION ENTRIES IN THE BOOKS OF HEAD OFFICE For incorporating all the items which appear on the debit side of the branch trading A/c: Branch Trading A/c Dr To Branch A/c For incorporating credit side items of the Branch trading A/c: Branch A/c Dr To, Branch Trading A/c
For appearing on the debit side of branch profit and loss A/c: Branch Profit and loss A/c Dr to Branch A/c For incorporating all incomes: Branch A/c Dr to Branch Profit and Loss A/c incorporating all the expenses
For incorporating all the assets of the branch: Various Branch Assets A/c Dr to Branch A/c For incorporating all the liabilities of the branch: Branch A/c Dr To Various branch liabilities A/c
For goods transferred from one branch to another : Receiving branch A/c Dr To Supplying branch A/c For charging depreciation on branch fixed assets: Branch A/c Dr To Concerned Branch Fixed Assets A/c
For Cash in transit Cash in transit A/c Dr to Branch A/c For Goods in transit: Goods in transit A/c Dr to Branch A/c
For payment made by the HO on behalf of the branch: Branch A/c Dr To Bank A/c For receipts by the Ho on behalf of branch: Bank A/c Dr To Branch A/c
For head office expenses chargeable to branch: Branch A/c Dr To Profit and loss A/c For payments made by the branch on behalf of the HO: Concerned payment A/c Dr To Branch A/c For receipts by the branch on behalf of the HO: Branch A/c Dr To Concerned receipts A/c
