Independent branch accounting pdf

A branch that keeps a complete record of all accounting transactions is called an independent branch. Additional Information. Conclusion: An independent branch keeps competitive records of all its transaction. Start Learning. Answer Detailed Solution Below Option 2 : debited to branch account. Key Points Debtors method This method of accounting is suitable for small-sized branches. Branch accounts receivable account. This is used to determine the credit sales made by the branch.

Branch cash account. This is used to record cash transactions made by the branch. Under this method the branch inventory is maintained using two methods Memorandum method Branch inventory adjustment method Memorandum method Under this method the branch inventory account is maintained using two columns; the cost column and the selling price column. Branch Inventory Adjustment method.

The balancing figure in the branch inventory account is the abnormal loss or abnormal gain made by the branch Autonomous Branches 5. Branch current account This account is maintained in the head office books to record all transactions between head office and branch. This account is debited with the following Goods sent to branch Expenses of the branch paid by the head office Profit of the branch This account is credited with the following Cash received from the branch Goods returned by the branch The balance in this account at the end of the year represents the investments made by the head office in the branch.

Head office current account This account is maintained in the branch books to record all the transactions between the head office and branch. This account is debited with the following; Cash sent to the head office Goods returned to the head office This account is credited with the following; Goods received by the branch Expenses of the branch paid by the head office Profit of the branch transferred to the head office books A balance in the head office current account at the end of the period indicates the obligation of the branch towards the head office.

The following list of balances has been extracted from the books of the branch and head office respectively. In the books of the branch UShs. Opening balance on the current account 24,, Net profit made by the branch ,, Cheque No. Opening balance on the current account 36,, Inventories sent to Mbarara but not yet received 10,, Required: Show the ledger accounts necessary for reconciliation of the two current accounts.

The following particulars relate to the half year ended 30 th June have been extracted from the head office and the branch. Particulars Head office UShs. Solution: a i Current accounts under branch accounts may not have the same balance because of the following; Goods in transit — Goods sent by the head office to the branch but by the close of the financial year these goods have not yet reached the branch.

Cash in transit — Cash remitted by the branch to the head office by the end of the financial year this cash has not yet reached the head office. Hire purchase is the system under which the property is acquired by payment made instalments, during the period of which the title in the property remains with the hire vendor.

The payment prior to the final are regarded as being purely in respect of hire, and the title of the property does not pass to the hire-purchase until such final payment or some other consideration provided for in the contract has been fulfilled. Contents of Hire Purchase Agreement: i the hire purchase price of the goods for which the agreement is made, ii the cash price of the goods, that is to say that the price at which the goods may be purchased for cash, iii the date on which the agreement is considered to be commenced or have commenced, iv the number of instalments in which the hire purchase price has to be paid, v the amount to be paid in these instalments, vi the mode of determining the date on which it is to be paid, to which person and which place it is to be paid, and vii the manner in which the goods in the agreement can be identified.

This price includes cash price and interest. The instalments may be equal or different depending on agreement. It is also a part of the hire purchase price. Characteristics or features of a Hire Purchase System: i It is like credit purchase; here the purchase price is paid or payable in instalments ii Goods are delivered by the hire vendor to the Hirer and the latter gets the possession on signing an agreement. It is a periodical payment in the nature of rent made to a person for the right to use certain property such as mine, patent, copyright.

When a person lessor having an exclusive right of some kind, surrenders it to another person lessee in exchange for a certain amount calculated with reference to output or units produced or sold, such an amount is known royalty.

Royalty is a revenue income to the lessor in the nature of Nominal account. It is credited to Royalty Receivable account and transferred to profit and loss account at the time of closing the accounts.

Methods of recoupment: i Fixed recoupment: In this type of recoupment, the lessee may be allowed the privilege within a fixed number of years initially.

Sub-lease: When the terms of the original lease gives powers to the lessee to sub-let a part of the land or right to another person, this privilege is known as sublease. It is define as the relationship between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Essential of partnership: i There must be an agreement entered into between two or more persons.

Active partner: Such partners are actively engaged in the business. Sleeping partner: Such partner who does not take part in the conduct of the business.

Nominal Partner: He is lends his name to the firm without any actual interest in terms of investing capital. Partner in profit only: This partner agree to pay profit alone, he does not take risk of sharing losses.

Partner by Estoppels: Such partner becomes partner by words spoken or words written or by represents himself or permits to be represented to be a partner in the firm. Sub partner: If a partner agrees to give his share of profits to an outsider, such outsider who gets the share in profit of the firm is called as sub-partner.

Partnership Deed: It is an outcome of an agreement created orally or in writing between two or more persons. It is not essential that agreement must be in writing, but to avoid any disputes between the parties in future. Contents of the Partnership deed: 1. The name of the firm 2. Name and address of the partners 3. Nature of the partnership business 4.

The period of the business if any 5. The commencement of business 6. Capital contributed by each partner 7. Nature of the capital i. The proportion of sharing the profits or losses 9. Amount and period of drawings Interest rate on capital, drawings Commission salary, allowance etc. Valuation method of goodwill and its treatments on admission, retirement or death or partners. Rights and duties of partners.

Under what situation the firm stands dissolved and The ways of keeping accounts, their audit etc. Rules applicable in the absence of partnership deed: 1. Profit sharing ratio: Profits and losses are to be shared equally among the partners.

Accounting by Debtor System At Cost. Methods of Accounting for Branch transactions. Join Co-production practitioners network. Sign Up or Sign In. Powered by. Badges Report an Issue Terms of Service. Co-production practitioners network A network for co-production practitioners. Blogs Forum.