INSTITUTE OF COST ACCOUNTANTS OF INDIA
CMA INTERMEDIATE: PAPER 5 – FINANCIAL ACCOUNTING
BRANCH ACCOUNTING
A. State whether each of the following statements is True or False:
1.      Under debtors system, Branch Account is a nominal account.                True
2.      Under debtors system Branch Account discloses profit or loss of the branch.  True
3.      Under debtors system, Branch Account is credited with opening balances of branch assets.  False
4.      Under debtors system, no entry is required in Branch Account for branch expenses paid by the branch out of petty cash.  True
5.      In Branch Account, no entry is made for credit sales, bad debts, discount allowed and return by customers.      True
6.      Under Debtors System, Debtors at close are shown on the Debit Side of the Branch Account after adjusting for Bad Debts, discount allowed etc.  False

29.  Only loading in stock and goods is shown in branch adjustment account.                      True
30.  Loading on stock is transferred to stock reserve/suspense account.       True
31.  Actual petty expenses incurred by the Branch Account under the Debtors system will not be recorded in the Branch Account.  True
32.  When the Branch Manager is allowed petty cash on Imprest System, the amount remitted by Head Office to reimburse the actual expenses will be debited to the Branch Account.  True
33.  Under debtors system, losses due to pilferage, wastage and other losses of stock due to normal and abnormal reasons are completely ignored.  True
B. Fill in the blank with appropriate word or words:
1.      The main establishment located at the main place of activity is called the Head Office and the subsidiary establishments located at various places are called Branch.
2.      Goods supplied to Dependent Branches by the Head Office may be either at Cost or at Invoice price.
3.      The One Account System or Debtors System is generally adopted when the branch is fairly small in size.
4.      Stock and debtors system or Analytical method is generally adopted when the branch is Large.

C. Choose the correct alternative:
1. Which one of the following is not true about a dependent branch?
a) These branch sell only those goods which are received from the head office.
b) All expenses of the branch are paid by the head office.
c) Petty expenses are paid by the branch and petty cash account is prepared at the branch either as simple petty cash or on imprest system.
d) Such departments maintain their own books of account.
2. Which one of the following is true about branch account under debtors system?
a) It is real in nature.
b) Assets and liabilities in the beginning or at the end are not shown in such account.
c) It is prepared to find branch profit or loss for a particular period.
d) All expenses paid by branch and head office is shown in branch account.
3. Which one the following is not true about independent branch?
a) These branches can purchase goods from open market.
b) They maintain complete set of double entry system.
c) They also maintain head office account.
d) They do not charge depreciation on fixed assets.
4. When goods are invoiced to Branch at Invoice price, the value of goods is adjusted by
a) Debiting Goods sent to branch account
b) Debiting Branch Adjustment Account
c) Debiting Stock reserve account
d) Debiting Branch Account

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