Introduction:



 A branch can be described as any establishment carrying on either the same or substantially the same activity as that carried on by the head office of the company. It must also be noted that the concept of a branch means the existence of a head office; for there can be no branch without a head office - the principal place of business. 

From the accounting point of view, branches may be classified as follows:

Type of Branches 

1. Inland Branch

A. Dependent Branches 

B. Independent Branch

2. Foreign Branch

Let's Learn all the Type of Branches briefly:

A. DEPENDENT BRANCHES

When the business policies and the administration of a branch are wholly controlled by the head office and its accounts also are maintained by it the branch is described a as Dependent branch. In such a case, branch accounts are maintained at the head office out of reports and returns received from the branch. Some of the significant types of branches that are operated in this manner are described below:

(a) A branch set up merely for booking orders that are executed by the head office. Such a branch only transmits orders to the head office;

(b) A branch established at a commercial center for the sale of goods supplied by the head office, and under its direction all collections are made by the H.O.; and

(c) A branch for the retail sale of goods, supplied by the head office.

Accounting in the case of first two types is simple. Only a record of expenses incurred at the branch must be maintained.

But however, a retail branch is essentially a sale agency that principally sells goods supplied by the head office for cash and, if so authorized, also on credit to approved customers. Generally, cash collected is deposited into a local bank to the credit of the head office and the head office issues cheques thereon for meeting the expenses of the branch. In addition, the Branch Manager is provided with a ‘float’ for petty expenses which is replenished from time to time on an imprest basis. If, however, the branch also sells certain lines of goods, directly purchased by it, the branch retains a part of the sale proceeds to pay for the goods so purchased. 


Therefore the head office can manage the branches' accounts using any of the following procedures:

  1. Debtors system.
  2. System of debtors and stocks.
  3. Final accounting system.
  4. Wholesale branch system.