This method is applicable particularly where there are large numbers of transaction and they are numerous. Branch accounting stock and debtor system advanced. Top 16 problems on branch accounts your article library. Branch accountstock and debtor method by cacma santosh. Prepare, under the stock and debtors system, the following ledger accounts in the books of the head office. Stock and debtors system advanced financial accounting commerce accounting commerce finance. In this video i have explained the branch accounts concept, types of branches and format of debtor system.
Important terms branch stock it is unsold goods at a branch at the beginningend of the year. These are four methods of accounting for branch accounting. The advantages of branch accounting are that the business is able to identify the financial performance of each of its branches. Debtors method stock and debtors method final account method whole sale branch method 9. This account is credited with the amount of gross profit which is transferred from branch adjustment account, cost of surplus of stock or any revenue income and this account is debited with all branch expenses, depreciation, cost of abnormal loss of stock, etc. The branch adjustment account should rather be split into two partsone. Debtorsopening 40,000 stockopening 25,000 goods sent to branch rs. It may be recalled that branch stock account, branch debtors account, branch cash account, branch expenses account, goods sent to branch account have been explained in detail, so, in order to avoid repetition we will only explain here in detail, the most significant and important account under stockdebtors system i. Branch profit and loss account exhibits the net result of the operations, i. Debtors system, stock and debtors system, final accounts system and wholesale price system. Jagrat creation presents this video lecture on branch accounts which includes sum wherein profit is found under the stock and debtors.
Branch accounting stock and debtor system advanced financial. Branch treats its head office as its creditor and head office treats its branch as its debtor. Ledger accounts to be prepared branch stock ac branch debtors ac branch expenses ac branch adjustment and profit and loss. Under this system there are two main accounts which must be prepared in order for the head. Branch accounts stock and debtors system lecture youtube. A business is often separated into a number of different branches each of which is treated as its own profit center. A branch accounting system is used to record transactions between a.
In that case, the adjustments on opening stock, on goods sent to branch and on closing stock should be shown in the first part and the branch expenses shown in the second part. Branch accounting allows the business to prepare branch trading and profit and loss accounts in order that it can assess the profitability of each of these branches. Under this method, branch and head office relationship is similar to debtor and creditors relationship. Branch accounting by cacma santosh kumarfree download pdf. Branch accounts stock and debtors system lecture 14 youtube. From the following information prepare necessary accounts under stock and debtor system. Branch accounting stock and debtors method slideshare. After watching this video you would get in depth i. Stock and debtors system is generally used when the goods are sent to the branch at. The difference between the two sides of this account reveals either gross profits if credit side to. This method helps the head office to make efficient control on branches as there are a few more accounts are to be opened viz. Goods sent or supplied to branch it is the goods supplied by the head office to its branch for sale.