Question 5 (b)
Branch accounting and departmental accounting
6 marks
- Time to write
- About 12 minutes
- Notes
- Crux notes
Question
Question 5 (b) · 6 marksDifferentiate Branch Accounting with Departmental Accounting.
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
What the paper leaves open
No mark is printed for this part, in English or in Hindi. Question 5 carries 18 marks and part (a) 12, so 6 marks are inferred.
Write it in this order
- Read; underline the asks; jot your points 1 min
- 1 Meaning of branch and of departmental accounting 2 marks 3 min
- 2 Differences: location, maintenance of accounts, allocation, reconciliation 3 marks 5 min
- 3 Differences: methods and transfers 1 mark 2 min
- Check: every ask answered, key terms underlined 1 min
Easy marks
- Step 1 opens with the meaning: a one-line definition, the quickest mark in it.
Short on time? Trim steps 1 and 2 evenly rather than skip one: each is capped at its own marks. End with step 3 in a line or two.
Try it first. About 12 minutes for 6 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Meaning. A branch is a unit of the business set up at a place away from the head office, and branch accounting records the results of each branch. Dependent branches sell what the head office sends them, and the head office keeps their accounts by the debtors system, the stock and debtors system, the final accounts method or the wholesale branch method. A department is a section of the business under the same roof, and departmental accounting keeps accounts for each department so that the progress of the business and of every department can be seen.
1One roof, one meter, many counters—clothes, toys, utensils share the bills under one roof.
Departmental accountingAll departments are at one place, under one roof; common expenses are apportioned between departments on a suitable basis.
2Shops scattered across the map—hill, town, seaside—each paying its own way.
Branch accountingBranches are at different places; each branch bears its own expenses.
| # | Basis | Departmental accounting | Branch accounting |
|---|---|---|---|
| 1 | Location | All departments are at one place, under one roof | Branches are at different places |
| 2 | Who keeps the accounts | The records are kept centrally, by the head office | An independent branch keeps its own accounts; a dependent branch's are kept by the head office |
| 3 | Allocation of common expenses | Common expenses are apportioned between departments on a suitable basis | No apportionment is needed; each branch bears its own expenses |
| 4 | Reconciliation | No reconciliation is needed | An independent branch's accounts must be reconciled with the head office's |
| 5 | Methods | Separate books for each department, or joint (columnar) accounts | Debtors, stock and debtors, final accounts or wholesale branch method; independent branches keep full books |
| 6 | Inter-unit transfers | Where one department's output is another's input, the transfers must be accounted for; they are usually at cost or at an agreed price, and any unrealised profit in stock is reserved | Goods are sent at cost or at invoice price; the loading is removed through stock reserve and adjustment entries |
Sources for the table. Rows 1 to 4 follow the DU text's comparison of departmental and branch accounting. Row 5 follows its two methods of departmental accounting and its methods for dependent branches. Row 6 sets out how inter-departmental transfers and branch loading are each handled.
Where the 6 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Meaning of branch and of departmental accounting | 2 |
| 2 | Differences: location, maintenance of accounts, allocation, reconciliation | 3 |
| 3 | Differences: methods and transfers | 1 |
| Total | 6 |
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