BRANCH ACCOUNTING

1. BRANCH ACCOUNTING
D.JEBASELVI ANITHA

2. INTRODUCTION
• Branch accounting is a bookkeeping system in
which separate accounts are kept for each branch
or operating location of an organization.
• Technically, the branch account is a temporary or
nominal ledger account, lasting for a designated
accounting period.
• Branch accounting provides better accountability
and control since profitability and efficiency can
be closely tracked for each location.

3. Branch Accounting Methods
Debtor system
Income statement system
Stock and debtor system
Final accounts system

4. Objectives of branch accounts
(i) To know the profit or loss of each branch
separately.
(ii) To ascertain the financial position of each
branch on a particular date.
(ii) To know the cash and goods requirements of the
various branches
(iv) To evaluate the progress and performance of
each branch.
(v) To know the profitability of each branch.

5. PROBLEM
• A Mumbai head office has a branch at Chennai
to which goods are invoiced at cost plus 20%.
From the following particulars, prepare Branch
A/c in the head office books:
Particulars ₹
Goods sent to Branch 2,11,872
Total Sales 2,06,400
Cash Sales 1,10,400
Cash received from Branch Debtors 88,000
Branch Debtorson 1st January 2020 24,000
Branch Stock on 1st January 2020 7,680
Branch Stock on31st December 2020 13,440

6. WORKINGS
• Opening Debtor + sales – Cash = Branch
Debtors
24,000 + 96,000 – 88,000 = 32,000

7. Chennai Branch Account
Date Particulars ₹ Date Particulars ₹
Jan 1 To Balance b/d: 10,000 Dec 31 By Bank:
Stock 7,680 Cash Sales 1,10,400
Debtors 24,000 Cash received
from Debtors
88,000
To Goods sent
to Branch
2,11,872 By Stock
Reserve 7,680 x
20/120
35,312
To Stock
Reserve
13,440 x
20/120
2,240 By Balance c/d
To Profit
transferred to
P&L a/c(BF)
34,640 Stock 13,440
Debtors 32,000
2,80,432 2,80,432