The branch expenses paid by the head office is recorded in the books by debiting branch?
-
A.
bad debt account and crediting branch debtor’s account -
B.
expenses account and crediting bank account -
C.
profit and loss account and crediting branch stock account -
D.
discount allowed account and crediting branch debtors’ account
Correct Answer: Option B
Explanation
Branch current account; This account is maintained in the head office books to record all transactions between head office and branch. This account is debited with the following
- Goods sent to branch
- Expenses of the branch paid by the head office
- Profit of the branch
From the above explanation, we would debit expenses account and crediting the bank account