PERIODICAL ACCOUNTS.—Under this heading a short resume is given of the method of dealing with.
(1) Statements from Branches.
(2) Statements for the use of directors, managers, or principals of a business, containing information as to (a) the manufacture, (b) the sale of goods, and (c) the financial position of the business.
The information contained in Statements from Branches and Statements for Directors is very often of a similar nature.
Both statements should contain sufficient information to enable the persons to whom they are rendered to form an opinion of the progress of the business during the period covered by the statement, and the directions to be given for future management.
Both statements should be as concise as possible, and should be cast in such a form as to be readily understood. Both should show :—Summary of cash ; purchases ;• expenses ; and dealings with stock.
The statements should be in a settled form, which should be continuous. In the case of branch accounts sufficient information should be given to enable trading . and profit and loss accounts for the _branch to be prepared.
As the statements are utilised for different purposes, different points arise in the actual working of each.
Branch branch is an accounting party, and the state ment should be so framed as to enable the branch accounts to be carefully scrutinised.
No form of branch statement is in itself sufficient unless the branch accounts are periodically examined by an inspector from the head office, the statements compared with the books, and the books and stock examined.
There are, of course, many different kinds of branches, as for instance : (a) Branch which is simply a sale depot for goods manufactured or goods purchased by the head office, the branch selling only for cash.
(b) Branch utilised as an agency, and feeding the head office, and col lecting accounts.
(c) Branch selling for cash and credit, or on credit only.
(d) Branch transacting an independent business, buying and selling.
(e) Similarly, and conducting a manufacturing business.
(f) Branch producing the finished article, all supplies, &c., being pur chased by the head office and forwarded to the branch.
No single form of statement would cover these subdivisions.
So far as possible all goods supplied to the branch should be purchased by the head office and forwarded. If possible, these should be charged to
the branch at selling prices, or the branch should be charged out in quan tities only.
Selling on credit should be limited.
All cash as received by the branch should be paid into the bank. Requi sitions for cheques, cash, and stock should be forwarded to the head office.
In a case where credit is given by the branch, a list of overdue accounts should be forwarded with each return.
Dealings between branches should be limited as far as possible. In case dealings are necessary—as perhaps in the case of retail shops—the goods should only be supplied on a proper requisition, duplicate of which should be forwarded by the branch obtaining the goods to the head office, and the original requisition should be forwarded to the head office by the branch supplying the goods, the same day. Particulars of these transactions should be shown on the weekly returns of both branches.
The head office will price out the goods, notifying the branches where necessary of the amount debited and credited.
In the cases of a and b, and possibly c, the head-office books would contain all the branch accounts, although in case of c the branch would keep a debtors ledger, while in the other cases a separate set of books would be kept by the branch.
The connecting link between these books and the head-office books would be by means of an account, or accounts, which would operate in the same way as adjustment accounts between separate branch books being treated as a portion of the head-office accounts.
In the case of examples a, b, and c, the branch may be operated by one account in the head•office books, to which all cash paid and received on account of the branch will be debited and credited, and all goods forwarded to the branch and returns therefrom debited and credited, or, if it is desired, the account may be subdivided to save analysis at thee end of the year, the heading of each account in the head-office books being preceded by the name of the branch. In case the branch is incurring liabilities by purchasing goods or otherwise, the return should be framed so as to show the liabilities falling due during the ensuing period, and the prospective receipts, to enable the same to be provided for.