Skip to content

CMA Intermediate · Financial Accounting · Branch (including Foreign Branch) and Departmental Accounts

Which of the following branches is correctly described as a 'foreign branch' for accounting purposes, as distinguished from a dependent or independent branch?

A foreign branch is one located outside the country that keeps its accounts in a foreign currency. Because its books are in another currency, its figures must be translated into rupees for incorporation in the head office accounts. Credit sales, goods supply or separate books alone do not make a branch foreign.

  1. AA branch which sells only on credit within India
  2. BA branch located outside the country whose accounts are kept in a foreign currencyCorrect
  3. CA branch which receives goods only from the head office
  4. DA branch which maintains its own books within India

Explanation

A foreign branch is one situated outside India, usually transacting in a foreign currency, so its financial statements must be translated into rupees. The other options describe features of dependent or independent branches within India. Location and currency are what distinguish a foreign branch.

Did you get it right without looking?

One question tells you little. A timed set on Branch (including Foreign Branch) and Departmental Accounts shows your real accuracy, how long you take and where you lose marks.

Practise Branch (including Foreign Branch) and Departmental AccountsFree diagnostic mock

More Branch (including Foreign Branch) and Departmental Accounts questions