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Monday, April 02, 2012

Financial Accounting 2008 (Solved)


Distinction between Departmental Accounts and Branch Accounts

The main distinctions between Departmental Accounts and Branch Accounts are given below:

Basis of Distinction

Departmental Accounts

Branch Accounts
1.Maintenance of Accounts





2.Allocation of Common expenses



3.Adjustments &
   Reconciliation of
   Accounts


4. Problem of foreign
    currency
All accounts are maintained at one place & departmental trading and profit and loss account is prepared accordingly.




Departments are not geographically separated from each other, so problem of allocation of common expenses among different departments arises.

The question of adjustments and reconciliation of accounts does not arise in departmental accounts.




The problem of conversion of foreign currency into home currency does not arise.
In case of branch, all branch accounts are kept at Head Office except cash, customers and stock registers are maintained at branch. But in case of independent branch all accounts are kept at branch and a branch prepares its own trading and Profit & Loss Account.
As branches are geographically separated from each other so the problem of allocation of common expenses among different branches does not arises.

In case of independent branch some adjustments and reconciliation of head office and the branch accounts are required to be done at the end of the year.

The problem of conversion of foreign branch figures may arise at the time of finalization of accounts of head office.