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Chapter
Branch accounting
Chapter five: Branch accounting
Five
FOR ONLINE READING ONLY
Introduction
The Preparation and Reporting Branch accounts refer to a division within an
organisation responsible for managing and documenting financial transactions. In
LANGUAGE EDITING
this chapter, you will learn the meaning, nature, types and transactions involved in
branch accounts. Also, you will learn how to prepare accounting records related to
businesses operating with branches. The competencies developed will enable you to
demonstrate understanding of the concepts and principles applied in the accounting
of businesses operating with branches and have ability to prepare and maintain
accounting records related to businesses operating with branches.
Necessities of establishing business it may not need to have branches. It may
branches have customers located in different regions,
but the company can still manage to serve
Nature and meaning of them from one location. However, the
branch accounts growth of the business may necessitate
A branch is a business operating unit the establishment of branches to increase
that operates away from the head office business visibility and accessibility of its
as a representative and it is meant to products to customers.
break geographical barriers. As a result,
the accounting systems of an entity are When a company has branches, obviously
designed to facilitate operations of the there will be transactions undertaken by
entity at the head office as well as in the head office and there will be others
the branches. Therefore, accounting for undertaken by the branches. In addition,
branches originates from the expansion there will be inter-company transactions
of the business operations to the extent that is between the head office and branches.
of having establishments in different Accounting for branches provides methods
geographical locations. Substantially, these and techniques that enable capturing
branches undertake the same activities as transactions of the branches separate
those undertaken by the head office. For from those undertaken by the head office.
example, when a company starts operations The importance of capturing business
at a small scale, with only a few customers, operations of every operating unit separately
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ACCOUNTANCY_DUMMY_23 JUNE.indd 126 23/06/2024 17:35