When business of a firm grows, it opens the branches to increase the sale and to cover more territory. There are various types of branches like dependent branch which is totally dependent on head office and other one is independent branch which is independent to make any deal in respect of business but as per the guidelines given by the head office. One is Inland Branch which is opened within the country and other one is foreign branch which is opened out side of country. From the point of view of accounts, we can classify the branches as follows:-

Branch Not Keeping Full System of Accounting:– Following are the main features of this type of branches:-

  • These type of branches sell the goods which is supplied by the head office. They can not purchase the goods independently.
  • Goods to these branches are supplied by head office some time at cost price and some time at invoice price.
  • All the expenses incurred by branch, are paid by head office only.
  • These branches are supposed to deposit the cash or cheques daily in bank account which is opened in name of head office.
  • Sales are normally made on cash basis but some time they are authorized to sell on credit also.
  • These type of branches keep only memorandum records only.

Branch Keeping Full System of Accounting:- Following are the main features of this type of branches:-

  • These branches are given full power to run the business.
  • They can make payment for expenditures, incurred by them. They need not to depend on head office. Of course, some expenditure like advertisement and research expenses are paid by head office.
  • They are not supposed to remit the cash to head office or deposit the cash in account of head office. They can deposit the proceeds in their bank account itself.
  • They maintain full system of accounts independently.

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