Branch Accounting MCQs [Multiple Choice Questions and Answers 2025 Free PDF]

Branch Accounting MCQs Multiple Choice Questions and Answers
For BCOM, MCOM, CMA Intermediate and Junior Accountant Exam

In this page, you will get Branch Accounting MCQs Multiple Choice Questions and Answers which are useful for BCOM, MCOM, UKPSC Assistant Accountant Exam and Various Professional Exams Like CA/CMA and CS.

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Introduction to Branch

A branch is a separate segment of a business. In order to increase the sales, business houses are requiring to market their products over a larger territory and may generally split their business into certain divisions or parts. These various parts or divisions may be located in different part of the same city or in different cities of the same country or in different countries in the world. These are known as branches. The head office controls the activities of various branches.

Introduction to Branch Accounting

Branch accounting is the process through which the accounting system of a branch is maintained. Branch accounting system is different for dependent, independent and foreign branch.

Branch Accounting MCQs 

A. 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.

Ans: d) Such departments maintain their own books of account.

2. Which one of the following is true about branch account under debtor’s 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.

Ans: c) It is prepared to find branch profit or loss for a particular period.

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.

Ans: 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

Ans: a) Debiting Goods sent to branch account

5. Goods are sent to branch at cost plus 20%. The loading on the invoice price will be

a) 16.67%

b) 28%

c) 33.33%

d) 25%

Ans: a) 16.67%

6. Which of the following statements is true with regard to accounting for branches?

a) Under debtor’s system, Branch account is a real account.

b) Under stock and debtor’s system, Branch adjustment account discloses the gross profit made by the branch.

c) Branch stock account is always prepared at cost price.

d) Under debtor’s system, Branch account is debited with losses like bad debts, discounts allowed and depreciation.

e) Under stock and debtor’s system, Branch stock account is a nominal account.

Ans: b) Under stock and debtor’s system, Branch adjustment account discloses the gross profit made by the branch.

7. The fixed assets accounts of are maintained by the head office, then

a) No entry is passed by the branch for depreciation on fixed assets

b) Branch account is debited and fixed assets is credited in the books of head office for depreciation

c) Depreciation account is debited and head office account is credited in the books of branch

Ans: b) Branch account is debited and fixed assets is credited in the books of head office for depreciation

8. When Branch 'A' sends goods to Branch 'B', in the books of Branch 'A', debit is given to

a) Head office A/c

b) Branch 'B'A/c

c) Both HO A/c and Branch A/c

d) No entry.

Ans: a) Head office A/c

9. In case of a dependent branch 'Branch fixed Assets A/c’s are maintained by:

a) Branch

b) Head office

c) Department

d) None of the above.

Ans: b) Head office

10. Which one is/ are the method/s of Accounting for Branches

a) Final Accounts Method;

b) Debtors Method and

c) Stock and Debtors Method.

d) All of the above

Ans: d) All of the above

Branch Accounting MCQs

B. State whether each of the following statements is True or False:

1. Under debtor’s system, Branch Account is a nominal account.                True

2. Under debtor’s system Branch Account discloses profit or loss of the branch.  True

3. Under debtor’s system, Branch Account is credited with opening balances of branch assets.  False

4. Under debtor’s 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

7. Under Debtors System, Depreciation is not shown in the Branch Account.  True

8. Reserve for Bad Debts and Reserve for Discount on Debtors will be recorded separately in the Branch account under the Debtors system.  False

9. Normal and abnormal loss are shown in branch account.    False

10. In Branch Accounting system, the Branch prepares the periodic returns based on which the accounting records are maintained at the Head office.      True

11.  Branch trading and profit & loss account is a memorandum account in case of dependent branch.  True

12.  Branch trading and profit & loss account is prepared at cost price.        True

13.  Branch account is debited with opening balance of branch assets and credited with opening balance of liabilities at branch.                True

14.  Branch account is a personal account under final account system.  True

15.  Goods in transit will be shown either on the both sides of the branch account or will be ignored totally from the branch account.     True

16.  Sales Returns will not appear directly in the Branch Account under the Debtors System.  True

17.  When the goods are returned by Branch, goods sent to Branch account will be debited in the books of Head Office.     True

18.  Branch Account under Debtors System is a Real Account.  False

19.  When branch turnover is large, stock and debtor’s system also known as analytical method is followed.    True

20.  Under stock and debtor’s system branch profit is ascertained by opening Branch Adjustment Account.  True

21.  Under the stock and debtor’s system Branch Stock Account is a Nominal Account.  False

22.  Branch stock account is always prepared at cost price.  False

23.  Branch stock shows gross profit or loss if goods are sent to branch at cost price.         True

24.  Under stock and debtor’s system no entry is required for normal loss of stock.  False

25.  In the case of foreign branches current assets and current liabilities are converted at the rate prevailing on the date of trial balance.  True

26.  In the case of branch keeping full system of accounting, (when branch fixed assets account is maintained in head office account) depreciation for the year is debited to profit and loss account and credited to head office account in branch books.  True

27.  The balances shown by head office account in branch books and branch account in head office books are always equal although the natures of balances differ.  False

28.  Under stock and debtor’s system, branch adjustment account is prepared to find gross profit. True

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 debtor’s system, losses due to pilferage, wastage and other losses of stock due to normal and abnormal reasons are completely ignored.  True 

Branch Accounting MCQs

C. 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 debtor’s system or Analytical method is generally adopted when the branch is Large.

5. Branch Account is Nominal in nature and is prepared in the Head Office Books

6. Under Debtors System, credit sales, bad debts, return inward, discounts allowed and depreciation are not taken in the Branch Account.

7. Under Debtors System fixed assets is shown on the credit side only after deducting the amount of depreciation, if any.

8. Under the Debtors System, the Head Office will record all the transactions relating to the branch in the Branch Account through Debtors and Creditors relationship between the Branch and the Head Office.

9. Under the Debtors System, the Reserve for Doubtful Debts /Reserve for Discount on Debtors should be deducted from closing Debtors and only the good closing debtors will be recorded in the Branch Account.

10. Actual petty expenses incurred by the branch will will not be recorded in the Branch Account under the Debtors System.

You Can also Download Financial Accounting MCQs which includes Branch Account MCQs from here.

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