branch accounts

1. Dependent Branches

2. In any business undertaking as the business grows it
often establishes branches in order to market its
products over a large territory. Expansion of business
activities may result in opening of new parts or
divisions. Under the same management different parts
or divisions located at different places are known as
branches.
The office/undertaking which operates in different
places are called branches, the one which controls
these operations is called as Head office.

3.  Types of Branches:
1. Dependent branches
2. Independent branches
3. Foreign branches
 Dependent branches: These branches depend on head
office, they don’t maintain separate set of books of
account. They depend on H.O for the supply of goods.
Features:
1. Depends on H.O for the supply of goods and cash for day
to day expense.
2. They sell only goods which are supplied by H.O, they are
not allowed to purchase from outsiders.

4. 3. Branch expenses that are regular in nature, i.e., shop
rent, salary, advertisement etc are paid by H.O
4. Petty expenses, carriage etc are paid by the branch out
of petty cash balance.
5. Sales can be made on cash or credit.
6. All accounts of branches are maintained by H.O.
7. Branch has to remit their cash collections to the H.O
immediately.
8. Goods are supplied by H.O at cost price or invoice
price.
9. It does not maintain separate set of books of accounts.

5. Methods of maintaining accounts under dependent
branches:
 Debtor System: Under this system the H.O opens only one
account for one branch called “Branch A/c”
 Stock and Debtor System: Under this system H.O opens
the following 5 accounts:
a. Branch Stock A/c
b. Branch Debtors A/c
c. Branch Expenses A/c
d. Goods sent to branch A/c
e. Branch adjustment A/c
 Final Account System: Under this system H.O opens
a. Branch trading and profit & loss A/c
b. Branch A/c