a. List three accounts prepared by the head office for the branch b. Explain two methods of accounting for goods sent to branch c. State four reasons for pr...

Answer Details

a. Three accounts prepared by the head office for the branch are:

• Branch Stock Account
• Branch Debtors Account
• Branch Expenses Account

b. Two methods of accounting for goods sent to branch are:

• Consignment method: Under this method, the goods are sent to the branch at the invoice price. The branch then sells the goods to customers and sends the proceeds to the head office. The head office then charges the branch with the cost of goods sold and any other expenses incurred by the branch.
• Cost price method: Under this method, the goods are sent to the branch at cost price. The branch then sells the goods to customers and sends the proceeds to the head office. The head office then charges the branch with the cost of goods sold and any other expenses incurred by the branch.

c. Four reasons for preparing departmental accounts are:

• To determine the profitability of each department: By preparing departmental accounts, the management can determine the profitability of each department. This helps in identifying the departments that are performing well and those that are not.
• To facilitate decision making: Departmental accounts provide detailed information about the performance of each department. This information can be used by the management to make decisions about resource allocation, expansion, downsizing, etc.
• To motivate departmental managers: Departmental accounts provide departmental managers with information about the performance of their departments. This information can be used to motivate the managers to improve the performance of their departments.
• To control costs: Departmental accounts provide information about the costs incurred by each department. This information can be used by the management to control costs and improve efficiency.