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Branch (Geographically)

Domestic Foreign

Dependent Independent IFO NIFO

Double Entry Single Entry

Debtors system
Stock and
Debtors system
(1) Domestic Branch:
If both “Head Office and Branch”
are located in the same country, it is
referred to as “Domestic Branch”
(2) Foreign Branch:
If Head Office is located in one country and
Branch Office is located in another country,
it is referred to as “Foreign Branch”

Head Office in India and Branch outside India

Branches can be divided either based on geographical basis
or on nature. Domestic branches can be divided either as
dependent branches or as independent branches. The basic
difference between the two is tabulated below:

Items Dependent Independent

Who will Manage Stock? Head Office Branch

Debtors Management? Head Office Branch

Cash Management Head Office Branch

Fixed Assets Management? Head Office Branch

Maintenance of Books of Accounts Head Office Branch

If remittance to Head Office is not given

HO separately sends cash HO doesn’t separately send

for meeting expenses cash

Remittance = Cash sales +

Remittance: Cash sales +
Collections from Debtors -
Collections from debtors
Identification of Problems
Method Key word

(1) Debtors System  “Branch A/c in HO Books”

(2) Stock & Debtors system  “Ledger Accounts”

(3) Single Entry  “Branch Trading & P&L”

Dependent Branch  Double Entry System  Debtors System
Format (Specimen)
In the books of Head Office …………… Branch A/c
Dr. Cr.
To Balance b/d Xxx By Balance b/d: Xxx

- Stock (@ Invoice Price) Xxx (Opening Liabilities if any)

- Debtors Xxx By Stock Reserve (opening) Xxx

- Cash Xxx By Good Sent to Branch - Returns Xxx

- Fixed Assets if any. Xxx By Good Sent to Branch – Removal of loading on net Xxx

To Goods sent to branch (@ Invoice Price) Xxx By Cash Remitted to HO Xxx

To cash (Sent to Branch) Xxx By Balance c/d: Xxx

To Stock Reserve (Closing) Xxx - Stock (@ Invoice price) Xxx

To Balance c/d (Closing liabilities, if any) Xxx - Debtors Xxx

Xxx - Cash Xxx

Xxx - Fixed Assets etc. Xxx

To Profit & Loss A/c (Profit) xxx By Profit and loss A/c (Loss) xxx
Stock and Debtors System
S. Transactions Journal Entries
1.* Goods Send to Branch at Branch Stock A/c (IP) Dr.
Invoice Price To Goods Send to Branch A/c (CP)
To Branch Adjustment A/c(loading)
2. Cash Sales at Branch Branch Cash A/c Dr.
To Branch Stock A/c
3. Credit Sales Branch Debtors A/c Dr.
To Branch Stock A/c
4. Sales Return Branch Stock A/c Dr.
To Branch Debtors A/c
5. Discount Allowed and Bad Branch Expenses A/c Dr.
Debts written off To Branch Debtors A/c
6. Cash collected from Branch Cash A/c Dr.
Debtors To Branch Debtors A/c
* Note: Reverse the Journal Entry in case of Return of Material to the Head Office.
Stock and Debtors System

S. No. Transactions Journal Entries

7. Cash from Head Office (to Branch Cash A/c Dr.
meet Expenses) To Head Office Cash A/c
8. Cash remitted to Head Head Office Cash A/c Dr.
Office To Branch Cash A/c
9. Removal of Loading on Stock Reserve A/c Dr.
Opening Stock To Branch Adjustment A/c
10. Removal of Loading on Branch Adjustment A/c Dr.
Closing Stock To Stock Reserve A/c
11. Purchase of Fixed Assets Branch Fixed Assets A/c Dr.
for Branch To Branch Cash A/c (or)
To Head Office Cash A/c
Stock and Debtors System

S. No. Transactions Journal Entries

12. Transfer of Balancing figure Goods Sent to Branch A/c Dr.

of Goods Sent to Branch To Purchases A/c

13. Transfer of Gross Profit to Branch Adjustment A/c Dr.

Profit & Loss A/c To Branch P & L A/c.
14. Expenses at Branch Level Branch Expenses A/c Dr.
To Branch Cash A/c
15. Transfer of Expenses to Branch P & L A/c Dr.
Profit & Loss A/c To Branch Expenses A/c
16. Transfer of Balancing figure Branch Stock A/c Dr.
from Branch Stock Account To Branch Adjustment A/c. (or)
Branch Adjustment A/c Dr.
To Branch Stock A/c