ACCOUNTI

NGFORBRANCHES
MEANING
Theoffi
cesoroutl
etsorestabli
shmentsofbusinessenterpr
isesatot
her
pl
acesotherthant
heheadof f
icearecal
ledBranches.
Aparentoff
icewhi
chcontrol
st heact
ivi
ti
esofalltheBranchesisknownas
Headoffi
ce.

Defi
niti
onsofaBr anch
Secti
on2(14)oftheCompaniesAct
,2013def
inesaBr
anchOffi
ceas“Branch
Offi
ce”,i
nrel
ati
ont oacompany,
meansanyestabl
i
shmentdescr
ibedassuch
bythecompany .

OBJECTI
VESOFBRANCHACCOUNTI NG
 Toknowt hepr of
itorlossofeachbr anchseparatel
y.
 Toknowt hefinancialposi
tionofeachbr anchsepar at
ely.
 Toknowt heexactgoodsr equi r
ementofv ar
iousbranches.
 Toev aluatethepr ogressandper f ormanceofeachbr anch.
 Tocal culatethecommi ssi
onpay abletotheBranchmanager ,
ifi
tisbased
onpr
of i
ts.
 Tomakenecessar ysuggestionsf orthei
mpr ovementofanybranch.
 Toexer cisepropercont rolovereachbr anch.

TYPESOFBRANCHES
 Domest icBr anches
 For eignBr anches
Domest i
cbr anchesar eal way sr egardedasi ndependentbranches.,
1. DependentBr anches
2. IndependentBr anches
Forei
gnbr anchesar ealway sr egardedasi ndependentbranches
DOMESTI CBRANCHES
Domest i
cbr anchesr efert ot hebr anchesl ocatedinthesamecount ryi
nwhi ch
theheadof fi
cei slocated.
FOREIGNBRANCHES
Forei
gnbr anchesr efert ot hebr anchesl ocatedoutsidethecountryinwhich
theheadof fi
cei slocated.
DEPENDENTBRANCHES
Dependentbr anchesr ef ert othebr ancheswhi chareunderthecontrolofhead
offi
ceforitsadmi nistration.Theaccount sofsuchbr anchesaremai nt
ained
bytheheadof fi
ce.
Dependentbr anchescanbef urtherclassi
fiedintotwocategori
es
 Ful l
ycont roll
edbr anches
 Par tl
ycont roll
edbr anches

FULLYCONTROLLEDBRANCHESar et hosewhichhav enopowersforany

deci
sionmaking.Theyarenotpermitt
edt omakeanypur chasesontheirown,
butmustdependont hesuppl
iesoftheheadof f
ice.Suchbranchescannot
ret
ainanyamountcollect
edfr
om it
sdebt orsorfrom anyot
hersource,
but
mustcompl
etel
yremi
titt
otheheadof
fi
ce.Theexpensesofsuchbr
anches
ar
etotal
l
ymetbytheheadoff
ice.

PARTLYCONTROLLEDBRANCHESar ethosewhicharegivensomelimit
ed
power sfordeci
sionmaki ng.Suchbr
anchesaregivenacertai
namountof
fl
exibil
it
yinit
soper at
ions.Itcanmakeanypurchasesonitsowninti
mesof
needandemer gencyandneednotwaitforthesuppli
esoftheheadoffi
ce.I
t
canr et
ainthecoll
ecti
onsandmeetsomeexpenses.Thebal anceof
col
lectionsaft
ermeet i
ngexpensesmustber emit
tedtotheheadoff
ice.

FEATURESOFDEPENDENTBRANCHES
 Goodsar esuppl i
edbyt heHeadof fi
ce.Br ancheshasnor ighttopur chase
goodsdi rect l
y.
 Headof f
icecansuppl yt hegoodsei theratcostpr iceorati nv oi
cepr ice.
 Br anchi srequi r
edt osel lthegoodsei therf orcashorcr edi torf orbot h
cashandcr edi tdependi ngont hei nstruct i
onsofheadof fice.
 Al ltheregul arexpensesofbr anchl i
ker ent ,salaryadv er
tisementet car e
paidbyHeadof fi
cet hroughcheque.But ,pettyexpensesl ikepost age,
tel
egrams, ent ert
ainmentet c.,ar epai dbyt hebr anch.Ev ent hesepet ty
expensesar epai dbyt hebr anchoutoft hepet t
ycashsentbyt hehead
offi
ce.
 Thebr anchi sr equiredt odeposi tthecashsal espr oceedsandcash
coll
ectedf rom t hedebt orscompl etelyt oHeadOf f
icedirect ly.
 Thebr anchdonotmai ntai ncompl etesetofbooks.Onl yt hef ollowi ng
booksar enor mal l
ymai ntained.
a) CashBook: Itismai ntainedt or ecor dt her eceiptsandpay ment sofcash
bythebr anch.
b) PettyCashBook: I
tismai ntainedt or ecor dther eceiptspet tycashand
paymentofpet t
yexpensesbyt hebr anch.
c) SalesBook: Itismai ntai nedt or ecor dt hecr editsalesofgoods.
d) Memor andum St ockRegi st er:Itismai nt ainedt or ecordthegoods
recoveredf rom HeadOf fi
ce, goodsr et urnedt oHeadOf fi
ce, goodssol dto
thecust omer sandt heopeni ngandcl osi ngst ockofgoods.
e) TotalDebt or sAccount s: Tor ecor dthecr editsalesmadet ocust omer s.
 Br anchdonotmai ntaincompl etesetofaccount s.Ther ef oreHeadof fi
ce
mai nt
ainsnecessar yaccount sofbr anchont hebasi sofst ockst at ement s,
cashst atement s,pettycashst at ement s,statementofdebt orset c.Sent
bythebr ancht oHeadof f
ice.

METHODSOFMAI NTAININGACCOUNTS
Theaccountsoft hedependentbranchesar
emaintai
nedbytheheadoff
ice.
Attheendofev eryaccountingper
iod,t
heheadoff
iceascer
tai
nsther
esult
s
oft
hebr anch,underoneoft hefol
lowi
ngmethods:
 Debt orsSy stem
 Fi nalAccount sSystem
 St ockandDebt orsSystem
 Whol eSaleBr anchSystem
DEBTORSSYSTEM
Undert hissyst em, theheadof f
icepr epareaBranchaccountasanomi nal
account .Att heendoft heaccount i
ngperiodtheheadof f
icepr eparesa
Br anchAccountt oascer t
ainthepr ofitorl
ossofthebr anch.
Theasset sandl i
abili
ti
esoft hebr anchatt hebeginningoft heaccount i
ngy ear
i
st r
eatedasgi v enbyt heheadof ficeandt hoseattheendoft heyearis
treatedasr eturnedbyt hebr ancht otheheadof fi
ce.
Thef or
matofBr anchAccountpr epar edbytheHeadof f
icef orascertai
ning
ther esul
t softhebr anchi sdependentupont wosituati
ons:
1. Whent heheadof ficesendsgoodst othebranchatcostpr i
ce
2. Whent heheadof ficesendsgoodst othebranchati nfl
at edpriceor
invoicepriceorl oadedpr i
ce.

1.Whent heheadoffi
cesendsgoodst othebranchatcostpri
ce:
(A)Whent heheadoff
icesendsgoodst othebranchatcostpr
iceand
i
nstr
uctsthebranchtosellonl
yforcash:
Account
ingentriesi
nthebooksofHeadof fi
ce

1. Forgoodssentt obr anch

BranchAccount Dr
ToGoodssentt oBranchAccount
2. Forgoodsr etur nedbybr anch
Goodssentt obr anchAccount Dr
ToBr anchAccount
3. Forthetransf erofbal anceofgoodssentt obr
anch
Goodssentt obr anchAccount Dr
ToPur chaseAccountorTr adi
ngAccount
4. Forpaymentofbr anchexpenses
BranchAccount Dr
ToCashorBankAccount
5. Forremittancesr eceivedfrom Br
anch
BankAccount Dr
ToBr anchAccount
6. Forrecor
di ngt hecl osingassetsatbranch
AssetsatBr anchAccount Dr
ToBr anchAccount
7. Forclosi
ngt heBr anchAccount
a) Incaseofpr of i
t:
BranchAccount Dr
ToGener al P&LAccount
b) IncaseofLoss:
Gener al Profit&LossAccount Dr
ToBr anchAccount
FORMATOFTHEBRANCHACCOUNTI NTHI SCASE:
Dr. BooksofHeadOf fi
ce-BranchAccountf orthey earended
Cr.
Par ticulars ₹ Par ti
culars ₹
ToOpeni ngAsset s ByOpeni ngLi abili
ti
es
OpeningSt ockatBr anch XXX Openi ngCr editorsatBr anch XXX
OpeningDebt orsatBr anch XXX Openi ngOut standing
OpeningPet t
yCashatBr anch XXX expensesatBr anch XXX
OpeningFur nitureatBr anch XXX
OpeningPr epai dexpensesat
Branch XXX
ToGoodssentt oBranch XXX ByBankAccount
(wit
ht hecostpr i
ceofgoods (Remi ttance) XXX
sentbyheadof fi
cetobr anch) CashSal es XXX
Recei ptsf rom Debt ors
ToBankAccount : XXX ByGoodssentt oBr anch
(wit
ht heamountofbr anch Account XXX
expensesmetbyheadof fi
ce) (witht hecostpr iceofgoods
returnedbybr ancht ohead
office)
ToCl osi
ngLi abi l
iti
es ByCl osi ngAsset s
Closi
ngCr editor satBranch XXX Cl osingSt ockatBr anch XXX
Closi
ngOut standing ClosingDebt orsatBr anch XXX
expensesatBr anch XXX Cl osingPet t
yCashatBr anch XXX
ClosingFur nitureatBr anch XXX
Closingpr epaidexpensesat
Branch XXX
ToGener alPr ofit&Loss ByGener alPr ofi
t&Loss XXX
Account( Prof i
ts) XXX Account( Loss, i
fany )
XXX XXX

NOTES:
 Apar tfr
om t heabov eit
ems, nootheritem mustbeshowni ntheBr anch
Account .
 Thev al
ueoff ixedassetsatt heendoft heaccount i
ngper iodmustbe
shownaf teradjusti
ngdepr eciat
ion.
 Forascer taini
nganymi ssinginf
or mationaboutBr anchDebt orsl i
ke
openingbalanceofdebt orsorcollecti
onf r
om debt orsorcl osingbal ance
ofdebtors,aMemor andum Cr edit
or sA/cmustbepr epared.
 Forascer taini
nganymi ssinginf
or mationaboutBr anchCr edit
or sli
ke
openingbalanceofcr editorsorpay mentt ocredit
or sorclosingbal anceof
credi
tors,aMemor andum Cr edi
torsA/ cmustbepr epared.
 Forascer taini
nganymi ssinginf
or mationaboutBr anchBi llsRecei vable
l
ikeopeni ngbalanceofbi ll
sreceivableorcoll
ect i
onf rom bill
sr eceivabl
e
orclosi
ngbal anceofbi l
lsreceivable,aMemor andum Bi l
l
sRecei vableA/ c
 mustbepr epared.
 Forascertaininganymissinginfor
mationaboutBranchBil
lsPay abl
eli
ke
openingbal anceofbil
lspayableorpaymenttobill
spayableorclosi
ng
balanceofbi l
lspayabl
e, aMemor andum Bil
lsPayabl
eA/ cmustbe
prepared.
 Forascertaininganymissinginfor
mationaboutBranchCashandBank
Balanceli
keopeni ngbankbal anceorcoll
ecti
onsandremittanceofthe
branchorcl osingbankbalance,aMemor andum Cash/BankA/ cmustbe
prepared.

B)Whentheheadoff
icesendgoodstothebr
anchatcostpr
iceandi
nst
ruct
thebr
anchtosel
lbot
hf orcashaswel
lasoncredi
t:

Somet imesopeni ngbalanceofdebt ors,cl

osi
ngbal anceofdebt or
s,cr
edi
t
salesandcashr eceivedfrom debtorsmaynotbegi venintheprobl
em.In
ordertoascertainthesameat ot
al debtorsaccounti spreparedasfol
l
ows.
TotalDebt orsAccount
Part
iculars ₹ Parti
culars ₹
ToBal anceb/d XXX Bycash XXX
ToCr editSal
es XXX ByB/ RRecei vedA/ c XXX
ToBi l
lsReceivable XXX BySal esreturnsA/c XXX
(B/Rdishonoured) ByBadDebt s XXX
ByDi scountallowed XXX
ByBal ancec/ d XXX
XXX XXX