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SSC Financial and Cost Accounting P-1 QUESTION #9654
Question 1
An Independent Branch sends a remittance of Rs. 50,000 to the Head Office. By year-end, the cash is still in transit. Which accounting entry should be passed to reconcile the accounts?
  • Debit Branch Account, Credit Cash in Transit Account in HO books
  • Debit Cash in Transit Account, Credit Branch Account in HO books✔️
  • Debit Head Office Account, Credit Cash in Transit Account in Branch books
  • No entry required until cash is received
Correct Answer Explanation
Since cash was sent by branch but not yet received by HO, from HO perspective the Branch Account is overstated (HO has not yet recorded the receipt). The reconciling entry in HO books is: Debit Cash in Transit A/c, Credit Branch A/c. This brings the Branch Account balance in line with the HO Account in branch books.