Observation

The 4(a) and 4(b) aspect were on branch accounting while the 4(c) aspect was on reasons for preparing departmental accounts. Their attempts in 4(a) were just fair as only few candidates could list the accounts prepared by the head office for the branch. Only few candidates could explain the methods of accounting for goods sent to branch as required in question 4(b). However, for question 4(c) majority of the candidates that attempted the question scored good marks.

Some of the suggested answers are:

4(a)      Accounts prepared by the Head Office for the Branch:

1. Goods Sent to Branch Account;
2. Branch Stock Account;
3. Branch Debtors Account;
4. Branch Expenses Account;
5. Branch Stock Adjustment Account/ Branch Adjustment Account;
6. Branch Profit and Loss Account;
7. Branch Current Account.

                                                                                                           
4(b)      Explanation of methods of accounting for goods sent to branch

1. When a branch keeps its own record (Independent Branch): The branch prepares the account of the whole activities at the branch and only remits the balances and statement of account to the head office for consolidation.
2. Where the head office keeps account and sends goods to the branch (Dependent Branch): Under this arrangement, the accounts of the branch are kept by the head office as well as its own accounts.

4(c)      Reasons for preparing departmental accounts
                        They are prepared in order to:

1. compare results of various departments;
2. provide basis for rewarding a department;
3. ensure overall effective supervision;
4. apportion a share of common expenses to the various departments;
5. ascertain the profit or loss of each department;
6. guide management in the formulating and taking of strategic decisions;
7. put in place constructive actions to help a failing department;
8. determine which department to close down or expand;
9. provide a means of controlling departmental sales and costs;
10. stimulate healthy competition among various departments thereby leading to efficiency;
11. monitor the progress of each department;
12. assist in regulating policies.