Accounting for branch operations solutions DOC

Title	Accounting for branch operations solutions
Author	Carmela May Bidon
Pages	1
File Size	218 KB
File Type	DOC
Total Downloads	226
Total Views	340

Summary

Description

ACCOUNTING FOR BRANCH OPERATIONS ANSWERS TO QUESTIONS Q11-1 A sales agency usually is limited to activities such as taking orders and arranging for delivery of goods and merchandise on behalf of the home ofcec Branch ofces typically provide more complete service to their customersc For example, a branch ofce is likely to stock and sell merchandise, provide credit and collection functions, engage in local advertising, and participate in business activities on a basis more comparable to those of the home ofcec Q11-2 The home ofce typically maintains the primary accounting records when a sales agency is involvedc As a result, a sale of merchandise or a collection of accounts receivable is recorded in the accounts maintained by the home ofcec A relatively complete accounting system is likely to be provided by a branchc Q11-3 Branches are established to carry out activities of the home ofce in outlying locationsc Although the branches are separate operating entities, they are not separate legal entities and generally report directly to the home ofcec Q11-4 Sales agencies and branches are especially useful in areas such as retailing and manufacturingc In a large community, several retail locations may be needed to have a store within reasonable driving distance of the targeted number of customersc Because they are under the control of the home ofce, sales agencies and branches make it possible to have the desired level of continuity between locations in features such as the product line carried and store layoutc Manufacturing companies often fnd it efcient to produce their products in several geographic locations to reduce transportation costs and to adapt the product to the characteristics of a particular marketc Q11-5 Investors are concerned with the overall proftability of the companyc However, in order to be successful, company management must be able to expand in those markets that are proftable and abandon or fnd ways of improving proftability in those areas that are not as proftablec If the records of all branches and sales agencies were merged, the ability of management to use accounting information in arriving at its decisions would be signifcantly - 557 - Irwin/McGraw-Hill 8 The McGraw-Hill Companies, Incc, 1999...