Part B: True/False Questions An expense item allocated by the home office to a branch is...

Part B: True/False Questions

An expense item allocated by the home office to a branch is recorded by the branch by a debit to an expense account and a credit to the Home Office account.

The balance of the Allowance for Overvaluation of Inventories: Branch ledger account is deducted from the balance of the Investment in Branch account in the separate balance sheet of the home office.

A debit to the Home Office ledger account and a credit to the Accounts Receivable account in the accounting records of a branch indicates that the home office collected accounts receivable of the branch.

If the home office carries branch equipment in its accounting records, an acquisition of equipment by the branch is recorded in the home office accounting records by a debit to the Investment in Branch ledger account and a credit to the Equipment: Branch account.

In a combined balance sheet for home office and branch, the balance of the Allowance for Overvaluation of Inventories: Branch ledger account is deducted from the balance of the Investment in Branch account.

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