What is the difference between branch accounts and departmental accounts

Save my name, email, and website in this browser for the next time I comment. Skip to content. Sep 30 October 2, Leave a Reply Cancel reply Your email address will not be published. In departmental accounts, no reconciliation is required because there is no central account division.

To find out the net result of organization the reconciliation of different branch is a main job. Departments are technically classified such as the production department, finance department, personnel department, etc.

Control is practically un-practicable in the case of a far-off branch since it is not possible for the Head Office to keep a constant watch. Departments are not separated rather existed under the same roof. There is no such classification in the department because all are common under the same roof. In that account, it records such items as inventory, accounts receivable , wages, equipment, expenses such as rent and insurance, and petty cash.

Like any double-entry bookkeeping system, the ledger keeps a tally of assets and liabilities, debits and credits, and ultimately, profits and losses for a set period. Technically speaking, in bookkeeping terms, the branch account is a temporary or nominal ledger account. It lasts for a designated accounting period. At the period's end, the branch tallies up its figures and arrives at ending balances, which are then transferred to the appropriate head office or head department accounts. The branch account is left with a zero balance until the accounting process begins all over again with the next accounting period or cycle.

There are several different methods for keeping branch accounts, depending on the nature and complexity of the business and the operational autonomy of the branch. The most common include:. Branch accounting can also be used for a company's operating divisions, which usually have more autonomy than branches, as long as the division is not set up legally as a subsidiary company. A branch is not a separate legal entity, although it can somewhat confusingly be referred to as an "independent branch" because it keeps its own accounting books.

However, branch accounting is not the same as departmental accounting. Departments may have their own accounts, but they usually operate from the same physical location. A branch, by its nature, is a geographically separate entity. Branch accounting is a common practice for businesses that operate in different geographic locations.

Though it seems synonymous with contemporary chain stores and franchise operations, branch accounting actually goes back a long way. Venetian banks maintained a form of it as early as the 14th century. The ledgers of a firm of Venetian merchants, dating from around , also show a form of it to try to account for overseas and home accounts.

Luca Pacioli's Summa de Arithmetica , the first accounting textbook, devotes a chapter to it. By the 17th century, branch accounting was being widely used by German counting-houses and other businesses. Moravian settlements throughout the thirteen original colonies used it for their books in the mids. Explain clearly. What is a foreign branch? Explain the methods of converting figures of Trial Balance of a foreign branch into the. Stock and debtors system is generally used when the goods are sent to the branch at.

C none of these. Up to the trial balance, the accounting arrangements for a foreign branch are exactly the same as for any. Shetty Solvents Co. Bangalore opened a branch at Hyderabad on January 1, The following information is available in respect of the branch for the year Department : It is an individual section or sector of business responsible for specific area of operation in consequence of decentralisation of authority.

Branch : It is an additional unit or establishment which operates in a specific area in accordance with Head Office instructions. Departmental Accounts : To distinguish a profit making department from loss making department, accounting related to every department is required.

It is basically a segment of accounts. Every department is profit centre, with the objective to maximise the profitability of department. Branch accounts : Its accounting depends on the type of branch. In case of dependent branch, H.