To account for expenses paid by head office on behalf of the branch; the branch should ________?

A. Debit profit and loss account and credit head office account
B. Debit head office account and credit cash
C. Credit cash and debit profit and loss account
D. Credit profit and loss account and debit head office account

Correct Answer:

Option A – Debit profit and loss account and credit head office account

Explanation

The head office maintains a book, (branch account) more or less like other personal accounts so that any expenses incurred on behalf of the branch will also be debited to the branch account. Similarly, in the branch books, there will be head office accounts