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SSC Financial and Cost Accounting P-1 QUESTION #9651
Question 1
In an Independent Branch reconciliation, which of the following is a reason for the difference between the Head Office Account balance in branch books and the Branch Account balance in HO books?
  • Different depreciation rates applied
  • Goods in transit from HO to branch✔️
  • Different accounting policies
  • Year-end accruals at the branch
Correct Answer Explanation
The two balances may differ due to: (1) cash in transit, (2) goods in transit, and (3) mistakes committed by either party. Goods dispatched by HO but not yet received at branch create a timing difference, causing a temporary mismatch in both parties' books.