branch accounting

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An accounting system in which each department or branch of a business is established as a separate cost centre or budget centre. The net profit per branch may be added together to arrive at the profit for the whole business. Branch accounts may be prepared to show the performance of both a main trading centre (i.e. the head office) and subsidiary trading centres (i.e. branches) but with all the accounting records being maintained by head office. Alternatively, separate entity branch accounts are prepared in which branches maintain their own records, which are later combined with head-office records to prepare accounts for the whole business.

Subjects: Accounting.

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