Question

When Head office maintains accounts of dependent branches by Debtors method, which of the following statements are correct in relation to accounting adjustments to respective branch account?

• A. A and E only
• B. B, C and D only
• C. A, B and D only
• D. C, D and E only

Hint:

Logic Tip: Debtors Method uses a single Branch Account in Head Office books to determine branch profit or loss.

Answer 1

The Correct Option is B

Step 1:
Under the Debtors Method, the Head Office maintains only one Branch Account to ascertain branch profit or loss.

Step 2:
The following adjustments are generally recorded:
• Branch expenses
• Branch stock adjustments
• Goods sent to branch
• Branch cash and debtors transactions

Step 3:
Under Debtors Method, statements related to proper adjustment of branch transactions and stock are considered correct. Thus, the correct combination corresponds to: \[ B,\; C,\; D \]

Step 4:
Hence, the correct answer is: \[ \boxed{\text{(2) B, C and D only}} \]