SS2 Third Term Financial Accounting Lesson Note – Branch Account

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WEEK FIVE (4)                              

TOPIC: Branch Account

CONTENTS:

• Definition of Branch Account
• Description of Branch Organization
• Types of Branch local and foreign
• Importance of Branch Account
• Differentiate between Branch and Departmental Organizations
• Preparation of branch account.

SUB-TOPIC: DEFINITION OF BRANCH ACCOUNT

Branch accounting records the trading transactions of different branches of the same business, whether such branches are situated in the same town or at other towns enables control to be exercised by management over the affairs of the branch.

In other words, branch account is defined as a small part of the business operating with some degree of independence. The company may have the head office in Abuja with branches in different parts of the country. E.g. Kano and Ibadan

DESCRIPTION OF BRANCH ACCOUNT:

• Division of Branch Account: Main division of Branch account are:
• Home branches where the records are kept by the Head office (Headquarter)
• Branches which keep all their own accounting record
• Foreign overseas branches

 TYPES OF BRANCHES: LOCAL AND FOREIGN:

For accounting purposes, branches may be divided into three (3) namely:

1. Where the branch bookkeeping is maintained at the head office, with the branch making returns (Dependent Branch)
2. Where the branch keeps its own book and only forwards its trial balance to the head office periodically. (Independent Branch)
3. Foreign branch (i.e.) Branches that operate in other situation can only be determined in the light of the particular circumstances of the branch. Thus factor to consider in choosing a system of accounting include:

• Location of branch
• Degree of control exercised by the head office
• Number of branches
• Nature of activities

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