ACCOUNTING SYSTEM

1. DEBTORS SYSTEM

         Debtors system is a system of ascertaining the profit made by a head office at a branch by preparing an account known as "branch account" in the books of head office

2.STOCK AND DEBTORS SYSTEM

         Stock and debtors system is an alternative method to findout the profit or loss made at the branch

3. FINAL ACCOUNT SYSTEM

         The profit or loss of a dependent branch can also be ascertained by  preparing a trading and profit and loss account.This account is usually prepared in cost price.So opening stock, goods sent to branch, goods sreturned by branch, closing stock at branch, etc are recorded only at cost price and not at invoice price.

4.WHOLESALE BRANCH SYSTEM

         Under the wholesale branch system the head office sends th goods to the branch at wholesale price and not at cost.So the goods sent to branches should be credited at whole sale price in the head office trading account.  

ACCOUNTING SYSTEM

         The accounts of the dependent branch are maintained only in the books of head office.The accounts of the dependent branch are maintained by the head office in any one of the following ways.

(1) DEBTOR'S SYSTEM

(2) STOCK AND DEBTORS SYSTEM

(3) FINAL ACCOUNT SYSTEM

(4) WHOLESALE BRANCH SYSTEM

FEATURES OF DEPENDENT BRANCH

 (1) The branch does not maintain its own set of books.But the head office maintain record of all transactions in respect of branch

(2) Goods are received from the head office.However, the outside purchases by branch are not allowed

(3) Goods are often supplied by head office at cost price. But sometimes they are sent at invoice price or loaded price

(4) All expenses of regular nature directly paid by head office through cheques

(5) All petty expenses at branch are paid by the branch manager from the petty cash received in advance from the head office

(6) Usually branch makes sales on cash basis.But in certain cases credit sales may be made with the authorization from the head office

(7) Cash received on account of cash sales and from debtors is duly remitted to head office or d eposited with a local bank in the account of head office 

DEPENDENT BRANCH

          Branches not keeping full system of accounting are known as dependent branches.These branches depend solely on the head office for all their requirements. Such branches operate as distribution depots for which goods are supplied by the head office to be sold on its behalf

OBJECTIVES OF BRANCH ACCOUNTS

(1) To know the profit or loss of each branch
(2) To know the financial position of each branch
(3) To control the activities of the branch
(4) To find out the requirement of goods or cash for each branch
(5) To provide concrete suggestions for the improvement in the working of different branches
(6) To compare the performance of one branch with that of another branch
(7) To meet the statutory requirements 

FEATURES OF BRANCHES

(1) Branches are units physically separated from the head office
(2) Generally there is only one branch at one place
(3) Most of the branches deal in the same type of goods or in the same line of business
(4) Head office makes capital investment for the branches
(5) The whole profits of the branches go to the head office

BRANCH ACCOUNTING

Branches are the various divisions of a business located in different places.
A business concern is often split into many parts or divisions.Such parts may be departments or branches.In case various divisions are located under the same roof or in the same building,they are called departments.When various divisions of the business are located in different places , in the same city or different cities, they are called branches.In such a case the main place of  business is known as head office and its subsidiary units are known as branches.

MEMORANDUM JOINT VENTURE ACCOUNT

Memorandum joint venture account is prepared exactly on the pattern of a profit and loss account to find out the profit or loss of the venture.But this account does not form part of the double entry system,hence the word memorandum is used,all items appearing on the debit side and credit of all the co-ventures account are written on the debit side and credit side of this account shows the profits or loss of the venture

FEATURES OF JOINT VENTURE

(1) It is a temporary partnership and comes to an end on completion of the particular venture.
(2) It is a particular partnership as it is formed for a particular venture
(3) It is a partnership without the use of the firm name.
(4) Ii is formed mainly to earn profit and to share it among all ventures

JOINT VENTURE

Joint venture is a venture which is undertaken by two or more than two person for doing certain business and sharing profits of this business in an agreed proportion.It is a particular partnership constituted temporary,without a firm name for carrying on a specific business.When the business is over the joint venture comes to an end.The parties in joint venture are known as co-ventures.Joint venture may be for purchase or sale of goods,construction and contract business etc

MANUFACTURING ACCOUNT

An account which contains full information about the cost of goods manufactured is termed as manufacturing account.A concern which converts the raw materials into finished goods is required to find out the cost of goods manufactured besides its gross and net profits.Such a concern first prepares manufacturing account and then prepares the trading and profit&loss account.Thus the main objects of manufacturing account are
(1) To ascertain the cost of finished goods produced
(2) To show the constituent items thereof

PREPARATYION OF TRADING ACCOUNT

The trading account is prepared debiting the account with the opening stock first,followed by purchases less returns(ie:- return outwards) and direct expenses.(expenses directly connected with such purchases.)and crediting the same with sales less returns.(return inwards) followed by closing stock.The difference between the totals of the both of thje yrading account gives gross profit or gross loss. In case the credit side total of it is more than the debit side total,the difference is the 'gross profit'.On the other hand if debit side total of it is greater than that of the credit side, the difference is the 'gross loss'.