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Advance Financi Al Accounting I I: Lyka Sanchez, CPA

This document discusses accounting for home office and branch transactions. It covers reconciling interoffice accounts, preparing individual and combined financial statements for the home office and branch. A home office may extend its operations through branches to generate more profits. The key difference between a branch and agency is that a branch is a self-contained business that acts independently, while an agency is not self-contained. Journal entries are provided as examples to record transactions between the home office and branches in their individual books. When preparing general purpose financial statements, the individual financial statements of the home office and branches need to be combined to view them as a single reporting entity.

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82 views16 pages

Advance Financi Al Accounting I I: Lyka Sanchez, CPA

This document discusses accounting for home office and branch transactions. It covers reconciling interoffice accounts, preparing individual and combined financial statements for the home office and branch. A home office may extend its operations through branches to generate more profits. The key difference between a branch and agency is that a branch is a self-contained business that acts independently, while an agency is not self-contained. Journal entries are provided as examples to record transactions between the home office and branches in their individual books. When preparing general purpose financial statements, the individual financial statements of the home office and branches need to be combined to view them as a single reporting entity.

Uploaded by

Tokki
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ADVANCE FINANCI

AL ACCOUNTING I
I
Lyka Sanchez, CPA
Grading System
 50% EXAMINATIONS

 25% PERFORMANCE

 25% ATTENDANCE
HOME OFFICE, BRANCH AND
AGENCY ACCOUNTING

By: Lyka Sanchez, CPA


Learning Objectives:
Accounting
01 - Account for home office and branch transactions in each of the home office’s and
branch’s books.

Reconciliation
02 - Reconcile interoffice accounts.

Preparing
03 - Prepare individual and combined financial statements of the home office and its
branch.

04 Different technique
Why do businesses e
xtending its operat
ions?
Why do businesses e
xtending its operat
ions?
- to generate more profits.
What is the differe
nce between Branch
and Agency?
What is the differe
nce between Branch
and Agency?
 Branch- is a self contained business which acts
independently.
 Agency- not self contained business.
Home Office

iGleam
Branches
iGleam

From Home Office From Home Office From Home Office


 Packaging  Packaging  Packaging
01  Ingredients 02  Ingredients
 Equipments
03  Ingredients
 Equipments
 Equipments
 Cash  Cash
 Cash .

From Home Office From Home Office From Home Office


 Packaging  Packaging  Packaging
04  Ingredients
 Equipments
05  Ingredients
 Equipments
06  Ingredients
 Equipments
 Cash  Cash  Cash
Journal Entries
In the books of Home Office and Branch

Home Branch
Office
Dec. 31 (Closing Entries) Dec. 31 (Closing Entries)
Inv. In Branch xx Sales xx Cash xx Sales xx
Cash xx COGS xx PPE xx COGS xx
PPE xx OPEX xx Ship. from Branch xx OPEX xx
Shipment to Branch xx Income Summary xx Home Office xx Income Summary xx

Income Summary xx Income Summary xx


Retained Earnings xx Home Office xx
Combined Financial Statements
Home Office and its branch
are viewed as a single Inv. In branch
HO

FS FS FS FS Ship. From HO
reporting entity for external Ship. To Branch

reporting, Thus, the


individual financial
statements of the home
office and the branch need • At Cost Price – Point of view of HO
to be combined when • At Billed Price – there’s allowance for
overvaluation of inventory. Point of
preparing general purpose
view of Branch.
financial statements.
Problems
Answers
Answers
THANK YOU!

Keep Fighting Guys 

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