S1: The balance of the Allowance for overvaluation of inventories: Branch ledger account is added from the balance of the Investment in Branch account in the separate balance sheet of the home office. S2: If branch managers are responsible for ordering merchandise from the home office any excess freight costs incurred as a result of inter-branch shipments are absorbed by the appropriate branch rather than by the home office. A. Only S1 is correct. B. Both statements are correct. C. Only S2 is correct. D. Both statements are incorrect.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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S1: The balance of the Allowance for overvaluation of inventories: Branch ledger account is added from the balance of the Investment in Branch account in the separate balance sheet of the home office. S2: If branch managers are responsible for ordering merchandise from the home office any excess freight costs incurred as a result of inter-branch shipments are absorbed by the appropriate branch rather than by the home office.

A. Only S1 is correct.
B. Both statements are correct.
C. Only S2 is correct.
D. Both statements are incorrect.

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