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JAMB Principles of Accounts 2014 Question 13

Question 13

Branch Accounts

A major way by which the headquarters guard against fraud in branches on cash remittance is through the introduction of

  1. A.imprest system only.
  2. B.direct purchase by branch.
  3. C.separate accountant for the branch.
  4. D.credit sales by only the headquarters.
Show the answer and explanation

Answer: D (credit sales by only the headquarters.)

Explanation

If only headquarters sells on credit, the branch deals only in cash sales, which are easy to check against remittances.