Branch Accounting – Understanding Fundamentals

May 23, 2018 | By admin4u | Filed in: Uncategorized.

Branching Out

If a business, whether profit or non-profit, is growing or strategy expansion, it usually opens additional locations. Banks, cafes, supermarkets, department stores, restaurants, beauty salons, airlines and even government offices can operate in multiple locations, in accordance with the needs of home or foreigners, customers or clients

or or branch .

| a branch or an agency. Both are part of a central organization and while keeping their operations from their home office 19459002 they are not separate legal entities from the latter.

The difference between the two keys is autonomy or independence. For example, a sales agency usually places inventories in inventory instead of displaying goods, ordering orders, and arranging delivery of goods. In other words, the agency acts solely on behalf of the home office (HO), which handles other aspects of operations, such as purchasing, advertising and lending goods.

However, the branch has a greater degree of autonomy, and thus operates more independently of the home office than the agency, primarily in the following respects:

  • Providers' wider service to customers or clients
  • Larger management declarations
  • Managing multiple aspects of business activities such as stockpiling, customer ordering, credit, and collection
  • Separate Accounting System Maintenance

Separate Account Accounting System

By reflecting greater autonomy, the branch typically maintains its own accounting system while the agency does not. In fact, the home office records all brokerage transactions in the previous accounting system.

Keeping separate accounting records from the branch and the home office facilitates a more effective control of operations and enables top management to better assess sector performance

Accounting Activity Accounting

Accounting accounting transactions generally are as follows:

  • External transactions or transactions by a company as a legal entity (eg buyers, suppliers, creditors, utility companies)
  • Internal transactions

    • within the branch
    • with another branch of the company
    • with home office

The branch of foreign transactions and those that by their very nature only affect the branch (ie intra-branch transactions within the branch) are subject to regular bills and journal entries. However, by filing branch transactions at H.O., certain intra-corporate invoices should be created and used. Likewise, branches or transactions between a branch branch with another branch are generally the subject of a contract between H.O.

At the end of the settlement period, the branch draws up its own financial statements based on the balance of the accounts, but only for internal reporting purposes. These sectoral financial statements are still to be combined with H.O. for external reporting purposes, so that the reports thus obtained reflect the company's financial position and results as a single entity.

Accounts between Businesses

At the time of the establishment of a business, branches are established in the following types of company accounts within the accounts or records of the branch or home office:

  • Branch Accounts of Accounts

    • "Home Office" Account

  • Accounting for home office books

    • "Investing in branches" account (one account for each branch)

In-house accounts are "Home Office" and "Investment in Branch" reciprocal accounts that are opposite or opposite. The "Home Office" account has a standard credit balance while the "Invest in Account" account has a normal debit balance. Any authorized transactions must also be recorded in one account, and the other account must also be noted. If each transaction is recorded, both accounts are equal or equal

The "Home Office" account appears in the main balance sheet of the branch, while "Investing in the branch" is a HO account. However, when preparing the financial statements for a company as a whole, these corporate reports are no longer in effect as they relate to internal activities that do not affect external reporting users.

Joint Venture Transactions

The following are the most common transactions between the branch and the HO which are both recorded using the abovementioned intra-corporate invoices:

  • Asset Transfer H.O. (eg cash, fixed assets, warehouse)
  • Recognition of the revenue or loss of a branch (revenue and cost account settlement by the branch to the "income aggregator" account)
  • is incurred at the branch but HO invoices and pays (for example, obtaining at the Office for the branch)
  • Expenditures HO (eg branch share for HO's advertising costs)
  • Sector-based transactions (eg branch office staff collecting personal accounts, transferring tangible assets, branch costs incurred by another branch employee)

Reconciliation of Investment Transactions in Accounts and Household Accounts

As discussed above, the balance of "Home Office" and "Investment in Branch" accounts are the same or equal. However, in reality, due to timing differences and recording errors, these two accounts are rarely in balance. Therefore, it is necessary to make regular reconciliation of the two accounts with the identification of the same items and the necessary adjustments in one or both of the books of the branch office and the branch branch of the Branch Accounting and Company

. The new branches not only indicate that companies are growing, but can continue to increase growth. In order for this growth to be sustainable, the information provided by the branch's accounting system must be complete, accurate and timely so that top management can make the right business decisions at the right time. Finally, "Many would say that information provided by an entity's accounting system is the most important source of information for financial decision makers" (Chalmers, Keryn et al., Accounting in Action). Principles of Financial Accounting 2nd Edition Queensland : John Wiley & Sons Australia, Ltd., 2010. 5. Printing)

Source by Ma Elena L Allena


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