The gross profit disclosed in the branch stock adjustment account represents ____
Take Free Practice Test On 2026 JAMB UTME, Post UTME, WAEC SSCE, GCE, NECO SSCE
Correct Answer: Option D
Explanation:
The Branch Stock Adjustment Account is used when goods are sent by the Head Office to a branch at a price higher than cost (often called invoice price).
This account adjusts the loading (the difference between invoice price and cost) so that the true gross profit made by the branch can be identified.
It essentially removes the effect of markup to reflect actual gross profit earned by the branch on sales to customers.
Therefore, the gross profit disclosed is the actual branch profit — not unrealized, estimated, or purely head office profit.
The Branch Stock Adjustment Account is used when goods are sent by the Head Office to a branch at a price higher than cost (often called invoice price).
This account adjusts the loading (the difference between invoice price and cost) so that the true gross profit made by the branch can be identified.
It essentially removes the effect of markup to reflect actual gross profit earned by the branch on sales to customers.
Therefore, the gross profit disclosed is the actual branch profit — not unrealized, estimated, or purely head office profit.