Core concepts
- 01Types: Dependent (debtors method, stock & debtors method) & Independent branches.
- 02Foreign branches translated as per AS-11 (integral / non-integral).
- 03Inter-branch transfers eliminated in HO books to avoid double counting.
- 04Unrealised profit on stock at branch eliminated through Stock Reserve.
- 05Final accounts incorporate branch trial balance after reconciliation.
Flowchart
Branch Types | Dependent | +-- Debtors Method +-- Stock & Debtors Method +-- Final Accounts Method Independent --> Maintain own books | v Consolidated with HO
Exam-critical pointers
- ⭐In Debtors Method, branch P&L not prepared separately — overall HO P&L absorbs.
- ⭐Goods in transit shown in HO books if branch did not receive by year-end.
- ⭐Wholesale Branches: distinguish between wholesale and retail profit.
- ⭐Insurance claim adjustment when branch stock destroyed must include loading.
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