By Location

• Inland (domestic) branches — operate in the same country as the head office
• Foreign branches — operate in a different country from the head office, involving different currencies

By Control

• Dependent (non-autonomous) branches — wholly controlled by the head office; the head office prepares and maintains their books of accounts
• Independent (autonomous) branches — have autonomy to prepare and maintain their own books of accounts

Non-autonomous branches do not have the power to prepare their own books of accounts. They are wholly controlled by the head office. Examples include bus service operators with agencies in different regions and fuel retailing companies with petrol stations across Tanzania.

Operational Arrangements

The nature of operations for non-autonomous branches includes:

1. Agent branch — receives customers' orders and remits them to the head office for execution
2. Retail selling unit — sells products received from the head office
3. Wholesale delivery unit — distributes products supplied by the head office

Books of Accounts for Non-Autonomous Branches

The following accounts are maintained by the head office:

1. Goods Sent at Selling Price

The head office uses the market selling price to charge goods to the branch. When goods remain unsold at year-end, unrealised profit must be adjusted through the branch adjustment account.

Example 5.1 (Debtors' Method)

Kwetusafi Ltd has a branch in Mtwara. The company sells products at 25% profit margin, and goods are transferred to the branch at the same selling price.

Branch Inventory Account

Goods Sent to Branch Account

2. Goods Sent at Cost Price

Under this approach, goods are transferred at cost. The branch account is used to record all transactions, and profit is determined by comparing sales with cost of goods sold.

3. Goods Sent at Cost Plus (Wholesale Price)

Goods are transferred at cost plus a wholesale profit margin. Branches then sell at retail price, earning profit equal to the difference between retail and wholesale prices.

(a) Debtors' Method

Used when a branch is small and does not make credit sales, or debtors pay at the same branch. Main accounts: Branch Inventory Account, Goods Sent to Branch Account, and Inventory Reserve Account.

(b) Inventory and Debtors' Method

Used when branches are permitted to make credit sales. Six accounts are maintained:

• Branch inventory account
• Branch accounts receivable
• Branch expenses account
• Branch statement of profit or loss
• Goods sent to branch account
• Branch adjustment account

(c) Statement of Profit or Loss (Final Accounts) Method

Separate statements of profit or loss are prepared for each branch to reflect their trading activities. This does not form part of the double-entry system.

Autonomous branches are large and complex enough to prepare and maintain their own books of accounts. Each branch prepares a trial balance and sends it to the head office.

Recording Transactions

• Each branch maintains a Head Office Current Account
• The head office maintains a Branch Current Account
• Every transaction between head office and branch is recorded in both current accounts
• The head office current account treats the branch as a debtor
• The branch current account treats the head office as a creditor

End of Year Procedures

1. Branches close their books and send trial balances to head office
2. Reconciliation between branch and head office current accounts is conducted
3. Necessary journal entries incorporate branch trial balance into head office books
4. Net profit is transferred to head office by crediting the head office current account

Items in transit are transactions recorded in one party's books but not in the other's because the items have not yet been received. Common examples include:

• Goods in transit — goods sent by head office but not yet received by branch
• Cash in transit — cash remitted by branch but not yet received by head office

Adjustments are made in the head office books to ensure current account balances match before preparing final accounts.

A Form 5 student in Tanzania might encounter branch accounting when working for a company like NMB Bank or CRDB Bank, which have branches across many regions. Understanding branch accounting helps a student appreciate how the bank's head office in Dar es Salaam tracks transactions from branches in Mwanza, Arusha, or Mbeya — recording goods sent, cash remittances, and branch expenses — to determine each branch's profitability and ensure proper financial control. This knowledge is directly applicable if the student later works in accounting or finance roles in any multi-location Tanzanian business.