Defining stock and debtors system

Under Stock and Debtors System, the head office does not open a Branch Account in its books. It maintains a few control accounts for recording the various branch transactions. These accounts usually are: (i) Branch Stock Account, (ii) Branch Debtors Account, (iii) Branch Expenses Account, (iv) Branch Cash Account (v) Goods sent to Branch Account, and (vi) Branch Fixed Assets Account. At the end of the accounting year, it prepares the Branch Adjustment Account and the Branch Profit & toss Account. This system is used only when goods are invoiced at , selling price which the branch is not allowed to vary. Let us now study the working of each account opened by the head office when such a system is followed. Branch Stock Account: This is the most important account which helps the head office in controlling the branch stock. It shows all branch transactions relating to goods. The goods sent to branches and the sales returns are shown on its debit side, and the sales (both cash and credit) and the goods returned to head office on the credit side.All these items are recorded at the invoice price. Hence, if the figure of any of these items is given at cost, the same should be converted into invoice price before recording it in the Branch Stock Account. The balance of this account would show the unsold goods (stock) lying with the branch. If it is found that the actual stock with the branch is less than the balance shown by the Branch Stock Account, it means that there is a 'shortage' in the stock with the branch. Similarly, if the actual stock with the branch is more than the balance shown by the Branch Stock Account, it would reflect 'surplus'. Both situations warrant investigation. But, AS far as their -recording goes, the shortage will be shown on the credit side of the Branch Stock Account and if there is surplus, the same will be recorded its debit side. Then, the balance of the Branch Stock Account will be the exact amount of actual stock with the branch. In other words, while preparing the Branch Stock Account, you will show the actual stock with branch as the balance in this account, and then if the totals of both sides do not tally, you will show the difference as shortage or surplus as the case may be.

Branch Debtors Account: This account shows all transactions relating to branch debts. He credit sales are shown on its debit side, and cash received from debtors, sales returns, bad debts, discount allowed, etc. on the credit side. The balance of this account represents the closing debtors of the branch. Branch Expenses Account: This account shows all expenses incurred by the branch. In addition, the items like bad debts, discount allowed, and depreciation on branch fixed assets, etc. is also debited to this account. Students who want to excel in this field should take online tutoring  help so as to get the benefit of getting online accounting assignment help as well as getting online support from the tutors of this particular field. students can avail these assignment help services by paying a nominal fee and then can get full access to these websites.