Which of the following is a common cause of a discrepancy between head office and branch trial office________
Answer Details
Stock and cash in transit is a common cause of a discrepancy between head office and branch trial office.
This is because stock and cash in transit are two types of assets that are often not recorded accurately in the accounts. Stock can be difficult to value and count accurately, especially if it is in transit between the head office and the branch. Cash in transit refers to cash that is in the process of being transferred between the head office and the branch, and may not be recorded in either account until it has arrived at its destination.
If the stock or cash in transit is not recorded accurately, it can result in a discrepancy between the head office and branch trial balance. For example, if the branch has recorded the stock as received, but the head office has not yet recorded it as sent, the branch will have a higher stock value than the head office. Similarly, if the branch has recorded cash in transit as received, but the head office has not yet recorded it as sent, the branch will have a higher cash balance than the head office.
, which suggests stock and repayment, is incorrect because repayment is not directly related to a discrepancy between head office and branch trial balance.
, which suggests creditors and cash in transit, is also incorrect because creditors are liabilities and not directly related to the assets that are in transit between head office and branch.
, which suggests debtors and cash in transit, is also incorrect because debtors are not assets that are in transit between head office and branch, and therefore not a common cause of discrepancy between head office and branch trial balance.