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Branch accounts

Sir, is there any difference between branch adjustment a/c and stock reserve a/c. If there what is the difference. In lecture sir taken balancing figure of branch adjustment a/c to branch p/l but stock reserve account balance t/f to head office p/l account... Why so?? Plz explain


Star Ca

Star Ca

CA Inter

3K+

10-May-20 20:19

27

Answers (7)

Branch Stock Adjustment Account deals with the loading. In short, loading (difference) is to be computed on Opening Stock at Branch, Closing Stock at Branch, Goods sent to Branch, Goods Returned by Branch. Branch Stock Adjustment Account is prepared at Invoice Price. The difference between the two sides of this account reveals either gross profits or Gross Loss. Branch Stock Reserve Account will be shown as a deduction from Branch Stock Account. In the next trading period, both the Branch Stock Account and Branch Stock Reserve Account will be transferred to Branch Account And Which Lecture are you talking about? Can you please tell the illustration number


ruchi lahoti

ruchi lahoti

Moderator

12-May-20 07:59

Lecture16,illustration 7


Star Ca

Star Ca

CA Inter

3K+

12-May-20 08:02

Can you plz explain branch stock reserve a/c again i could not get it. > As per my knowledge branch stock adjustment a/c is prepared when branch stock a/c is prepared at invoice price. To know gross profit. > i could not understand clear difference between branch stock reserve account and branch stock adjustment a/c


Star Ca

Star Ca

CA Inter

3K+

12-May-20 08:07

Can you plz explain branch stock reserve a/c again i could not get it. > As per my knowledge branch stock adjustment a/c is prepared when branch stock a/c is prepared at invoice price. To know gross profit. > i could not understand clear difference between branch stock reserve account and branch stock adjustment a/c

See, under Debtors method, as the closing stock is inclusive of the loading amount it violates the concept of AS-2 (i.e, Valuing inventory at cost). Hence, in order to eliminate the excess loading in closing stock the difference between the Selling Price and Cost is transferred to Stock Reserve. This is why Stock Reserve is created


ruchi lahoti

ruchi lahoti

Moderator

12-May-20 08:36

Thank you! Understood tqsm.


Star Ca

Star Ca

CA Inter

3K+

12-May-20 08:38

Also branch adjustment account is prepared in order to record the differences between goods sent to branch and returned and other things as I told first. Where as, stock reserve only records for loading (profit/loss) in opening and closing stock Hence Balance in stock reserve is transferred to Head office and balance in Branch adjustment account is transferred to Branch account


ruchi lahoti

ruchi lahoti

Moderator

12-May-20 09:30

Yes, i understood tqsm


Star Ca

Star Ca

CA Inter

3K+

12-May-20 09:32