Back to Questions
SSC Financial and Cost Accounting P-1 QUESTION #9660
Question 1
In the Branch Adjustment Account under Stock and Debtors System, a 'Branch Stock Surplus' arises when:
  • The actual cash collected exceeds the expected receipts
  • The closing stock physically found at branch is MORE than the book balance
  • The selling price exceeds the pro-forma invoice price resulting in excess cash from sales✔️
  • The branch sells goods above the authorized selling price
Correct Answer Explanation
A surplus in the Branch Stock Account arises because sales are recorded at selling price (higher) while the stock is carried at pro-forma invoice price (lower). The surplus = Selling Price – Pro-forma Invoice Price on goods sold, and represents extra cash collected above the invoice value.