online universities in usa > College Scholarships > Scholarship Application Strategies > Apply for Scholarships
Aiou Solved Assignments code BA/B.com code 444 Autumn & Spring 2023 assignments 1 and 2 Course: Advanced Accounting (444) spring 2023. aiou past papers
AIOU Solved Assignments 1 & 2 Code 444 Autumn & Spring 2023
management of the Branch. Here, the Opening stock, Goods sent to Branch, Goods returned by Branch and Closing stock will appear at invoice price only. To find out the real profit, adjustment entries are to be made to remove the excess price or the difference between the invoice price and the cost price.
Alternatively, Branch Account can be prepared through Double Column Method and if so, an adjustment entry is needed. This we prove by solving a problem under both the methods. (Illustration 24.10)
The Head Office of a company invoices to its Coimbatore Branch at cost plus 20%. The Coimbatore Branch also purchases independently from local parties goods for which payments are made by the Head Office.
‘MEM ?I?M a
All the cash collected by the Branch is banked on the same day to the credit of the Head Office and all expenses are directly paid by the Head Office except for a petty cash account maintained by the Branch for which periodical transfers are made by the Head Office.
- Stock and Debtors System:
Under the Debtors System, the profit or Joss can be found out by preparing a Branch Account in the books of Head Office. The Branch Account has been treated as a customer, a personal account in an impersonal name. This type of accounting treatment works well in small Branches. When authorised to make credit sales also, the Debtors System proves inadequate. A detail of credit sales remains unaccounted in this system. To overcome this, Stock and Debtors System has been devised.
Accounting for Branch Operations
a) Occasionally, accounting for branch operations is centralized at the home office, and the procedures followed are similar to those for a sales agency. If such an approach is used the branch maintains only limited accounting records and submits source documents for transactions to the home office for entry in the centralized accounting system, just like sale agencies.
b) Normally and especially with larger branches, the home office and branches maintain separate accounting systems. Each maintains a full set of books with a complete self-balancing set of accounts. Each records its transactions with external parties in its own accounting system. These transactions are recorded in the normal manner, and no special treatment is needed. In addition, the home office and branch both must record transactions with one another of their respective accounting systems.
c) Even though the home office and each branch maintain separate books, all accounts are combined for external reporting in such a way the their external financial statements represent the company as a single economic enterprise. As with the preparation of consolidated financk statements, simply adding together the balances of the accounts contained in each accounting system does not result in the portrayal of a single economic entity. Certain elimination are needed as home office and one c more branches is quite similar to the preparation of consolidated finance statements.
Transactions with external parties are recorded in the normal manner. Transactions between the home office and a branch also are treated in the normal manner except they are maintaining its record in intra company accounts. These accounts are reciprocal accounts between the home office and the branch. When the books of both the home office and the branch are completely up to date, the balance in an intra-company account on the home office, books will be equal but opposite that of the related intra company account on the branch books. For example, if an intra-company account on the home office books has a Rs. 10000 debit balance the related Infra Company account on the branch books should have a cred balance of the same amount.