System one-the head office maintains all the accounts, Financial Accounting

SYSTEM ONE-THE HEAD OFFICE MAINTAINS ALL THE ACCOUNTS

This system is suitable for an enterprise that has small branches (possibly in another area of the town or city where the Head Office –HO– is situated), which sell goods supplied by the HO. On the sale of goods, cash is received which should be banked intact into the local branch of a bank; the bank can be instructed to credit the Head Office account, which is maintained at a different branch of the same bank. Cash expenditure by a branch is normally funded by an imp rest provided by the HO, replenished at regular intervals by a cheque for the actual amount of expenditure incurred.  Where credit sales are permitted at a branch, each invoice raised at the branch will be made out in the triplicate; one copy is given to the customer as the invoice; the second copy is sent (as part of a batch of invoices) to the HO; the third is retained by the branch for reference. All goods should be purchased through a central buying department at the HO.  Goods are issued to branches on the basis of requisitions received from branch managers.  Of course it should be realized, that with the advent of computers the amount of paperwork may be substantially reduced and procedures not exactly as described.

The branch manager should be required to forward to HO at weekly, fortnightly or monthly intervals, returns giving particulars of goods received from and returned to HO, cash and credit sales, cash received from debtors, expenses, cash banked and stock and cash in hand at the end of the period. From these, the HO will maintain accounts for the branch in the HO books.

Posted Date: 12/12/2012 1:08:37 AM | Location : United States







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