How Accounting objectives can be achieved

There are two main ways by which this can be achieved:

• All the accounting records are maintained at the head office; or
• Each branch or department maintains its own accounting system.

There can be combinations of both systems; for example, each branch could maintain its own accounting system for income and expenditure, stock, debtors, cash and creditors, but fixed assets at branches, long-term investments made by and loans granted to the enterprise as a whole are reflected in the accounting system maintained by the head office.

We shall consider these accounting systems, and, in addition, we shall consider how accounts maintained by a foreign branch are translated into the currency of the head office.