A business may be and generally is split into so many parts or division. If the various divisions are located in different places of the same town or in different towns they are known as branches. Branches can be classified into two categories for the purpose of recording transaction in the books of account
(i) Dependent branches
(ii) Independent branches
1. Dependent branches: The term dependent branch means a branch which doesn’t maintain K. own set of books. All records have to maintain by the head office. Under this system, generally, all goods are supplied to the branch by the head office. However, sometimes, the branch may be allowed to make purchases from thecal panics for which the payments are ‘made directly by the head office. The dependent branches may be classified under the following:
A. Branches receiving goods from head office at cost & making Cash sales A branch that receives goods only form the head office sells only for cash and remits all the cash collected to head office. The expenses of the branches being met by remittances from the Head office.
B. Branches receiving goods from Head office at cost price & making cost & credit sales: A branch that receives goods only form the head office, sells both for cash as well as credit and remits all the cash collected to the head Office, the expenses, of the branch being met by remittances from the head office.
C. Branches receiving goods from head office at selling price & making Cash & Credit Sales: A branch that receives goods for head office at invoice price only and sells both for cash & credit and remits all the cash collection to the head office.
