Introduction to Branch Accounting
A branch can be defined as a small part of the business operating with some degree from a department mainly because of the extent of its activities.
Branch accounting records the trading transaction of different branches of the same business, whether such branches are situated in the same town or in other towns. It enables control to be exercised by management over the affairs of the branch.
Objectives of Branch Accounting
1. To prevent wastage
2. To access the performance of the branches
3. To prevent fraud and other malpractices
4. To ascertain the profit and loss for each branch
5. It assists the organization to determine the performance of a branch manager.
Differences between Branch and Departmental Organization
| Branch Organization | Departmental Organization | |
| 1. | They are separated from main organization | They are attached with the main organization under a single roof |
| 2. | They are geographically separated | They are not separated rather exists under the same roof |
| 3. | Allocation of branch common expenses does not arise | Allocation of departmental common expense is a tough job |
| 4. | To find out the net result of the organization, the reconciliation of different branch account is the main Job | No reconciliation is necessary because there is a control account division |
Divisions of Branch Accounts
The main divisions of branch accounts are:
(a) Home branches where the records are kept by the headquarters
(b) Branches which keep all their own accounting records
(c) Foreign overseas branches
Responses