Cash stolen from branch-taking s is recorded in the Head Office books by debiting

Cash stolen from a branch is considered a loss for the company. Therefore, the Head Office would record the loss in their books of accounts. To record the cash stolen from a branch in the Head Office books, the following entry is made: Debit Defalcations Account (a nominal account which records losses) Credit Branch Stock Account (a personal account which records the stock of the branch) This entry reduces the stock of the branch and records the loss in the Defalcations Account. By recording the loss in the Defalcations Account, it is properly classified as an expense in the profit and loss account, which ultimately reduces the profit for the year. Therefore, the correct answer is to debit Defalcations Account and credit Branch Stock Account. Answer (A) is correct. In summary, cash stolen from a branch is recorded in the Head Office books by debiting Defalcations Account and crediting Branch Stock Account.