Question

1. A debit to the Income Summary ledger account and a credit to the Home Office account appear in:

1. The accounting records of the home office to record the net income of the home office
2. The accounting records of the home office to record the net income of the branch
3. The accounting records of the branch to record the net income of the branch
4. Some other manner

2. The following journal entry (explanation omitted) appeared in the accounting records of Marty Corporation's only branch:

            Operating Expenses                   100,000

                  Home Office                                          100,000

                  The journal entry indicates that:

1. The branch incurred operating expenses for the benefit of the home office
2. The home office incurred operating expenses for the benefit of the branch
3. The branch paid the home office for services rendered to the branch
4. None of the foregoing occurred

3. The Allowance for Overvaluation of Inventories: Branch ledger account of the home office is debited:

1. When the home office ships merchandise to the branch at a billed price that exceeds cost
2. In a journal entry to close the account at the end of an accounting period
3. When the branch's ending inventory is recorded in the home office accounting records
4. In some other circumstances

4. The Income: Branch ledger account is maintained in the accounting records of:

1. The home office only
2. The branch only
3. Both the home office and the branch
4. Some other manner

5. The Home Office ledger account in the accounting records of a branch is best described as:

1. A revenue account
2. An equity account
3. A deferred revenue account
4. A liability account

Answer 1

Question 1:

Option B. The accounting records of the home office to record the net income of the branch

Will be made to incorporate the branch accounts in the Home office books

Question 2:

Option A. The branch incurred operating expenses for the benefit of the home office

Any expense incurred by branch on behalf of home office will be credited to home office account in order to recover from home office.

Question 3:

Option A. When the home office ships merchandise to the branch at a billed price that exceeds cost

Question 4:

Option A. The home office only

Branch ledger will be maintained by home office only but not branch itself.

Question 5:

Option D. A liability account

The branch will treat the home office as a lender.

answered by: anonymous