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Chapter
                                         Branch accounting
             Chapter five: Branch accounting
             Five


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            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

                                                                         Student’s Book Form Five
                                                   126



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     ACCOUNTANCY_DUMMY_23 JUNE.indd   126                                                   23/06/2024   17:35
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