Dependent branches are the branches that do not keep their records but all the records are maintained by head office. It is a branch that is dependent upon the Head Office mainly for “Goods and Cash”. They are not authorized to act solely without the prior permission of the head office. The activities of branch are controlled by head office and usually, it carries on the same functions as of the enterprise. All the plans, policies, rules and regulations of these branches are totally formulated and executed by the head office. When the policies and administration of a branch are totally controlled by the head office, who also maintains its accounts, the branch is called a dependent branch. In other words, all the functions of the dependent branch are totally controlled by the head office. Books of accounts relating to such a branch also will be maintained by Head Office. All major expenses of the branch are paid, as far as possibles by the Head Office.
Under the dependent branch, two types of branches are included, which is termed as service branch and retail branch.
- Service Branch: All the branches which are booking or executing orders on behalf of the head office are called service branches. These are the branches that are busy in executing all the orders for the sake of head office.
- Retail Branch: Retail branches are also dependent branches, but they are concerned with the head office for selling goods, produced by the head office itself or purchased from outside in a bulky position and are sent to the retail selling branches for selling them out as like.
Features of Dependent Branch:
- The branch receives goods from Head Office. Only those goods supplied by the Head office will be dealt (sold) by branch.
- Goods may be supplied to Head office at Cost price/Invoice price
- Cash sales and collection from debtors are periodically remitted to the Head office.
- Branch expenses like salary, rent, etc. are paid/met by the Head office.
- The head office separately sends cash to the branch for meeting expenses.