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1) The accounting system is also appropriate for departmental accounts.
2) The branch stock account is a practical means of controlling stock at the branch. Supervisors can quickly ascertain the selling price of stock at a branch and compare this with the balance shown in the head office books. Such spot checks will bring to light:
3) This method prevents branch staff from knowing the cost of goods being sold and preserves secrecy with regard to profits.
4) Ascertaining the percentage or fraction to deduct from invoice price may cause some students difficulty. No doubt it is appreciated that the percentage to be deducted from the selling price is not the same as that which is added to cost, e.g. If 33 1/3% is added to cost to arrive at invoice price then 25% must be deducted from selling price to get back to cost.
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