Home & Branch Office Accounting

ismail_aims · #1 Tuesday, February 26, 2008

Please guide me regarding difference between Home Office & Branch Office Accounting.
Thanks

Astute Accountant · #2 Saturday, April 12, 2008

Branch Office Accounting: Maintenance of a separate accounting system for each branch of one legal entity. The home office opens an account in its general ledger entitled Branch, Branch Control, Investment in Branch, or some other similar name. Frequently, one account will be used to show the long-term investment in a branch while another account (such as Branch Current) will be used for more common accounts. In the home office ledger, this account or group of accounts is charged for everything sent to the branch or for services rendered to or for the branch, and it is credited for amounts received from the branch.

Home Office Accounting: In a similar manner, the branch ledger maintains an equity account entitled Home Office, Home Office Control, Home Office Current, or some other similar name. This account is credited for all assets received by the branch from the home office. It is also credited for all debts incurred for merchandise acquired or for services rendered by the home office for the branch. Such an account would also be credited as a result of expenses incurred by the home office for the benefit of the branch. It is debited for amounts sent by the branch to the home office.

In operation, the branch account on the home office books will be debited when the home office account on the branch books is credited, and vice versa. Thus, the balances of such a pair of accounts should be equal in dollar amount, but the balances should be the opposite sides of the respective accounts. Two accounts that have such a relationship are often referred to as “Reciprocal”.

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