Question 4 (a)
Debtors System and Stock and Debtors System
6 marks
- Time to write
- About 12 minutes
- Topic
- Branch accounts
- Notes
- Crux notes
Question
Question 4 (a) · 6 marksUnder Branch Accounting, differentiate between Debtors System and Stock and Debtors System.
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
Read from the question
- differentiate betweenSet the differences out in a table, basis by basis, not as two separate essays.
Write it in this order
- Read; underline the asks; jot your points 1 min
- 1 Six bases of difference 6 marks 10 min
- Check: every ask answered, key terms underlined 1 min
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.
Both are methods by which a head office keeps the accounts of a dependent branch.
| # | Basis | Debtors System | Stock and Debtors System |
|---|---|---|---|
| 1 | Accounts kept | One nominal Branch Account for each branch | Several accounts: Branch Stock, Branch Debtors, Branch Expenses, Branch Adjustment, Branch Profit and Loss, Goods Sent to Branch |
| 2 | Profit shown | Only the net profit or loss of the branch | Gross profit (Branch Adjustment) and net profit (Branch Profit and Loss) separately |
| 3 | Control over stock | No control; only the closing stock figure appears | Branch Stock Account at invoice price shows any shortage or surplus |
| 4 | Losses | Normal and abnormal losses are not shown | Normal and abnormal losses are shown and treated separately |
| 5 | Suitability | Small branches | Larger branches, where goods are sent at invoice price |
| 6 | Work involved | Simple, few entries | More detailed, more entries |
The Stock and Debtors System was adopted because under the Debtors System profit cannot be split into gross and net, there is no control over stock, and losses are not shown.
Where the 6 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Six bases of difference | 6 |
| Total | 6 |
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