Key Differences between Branch and Department

A branch is a segment of a business company located outside the head office. Department is a different functional area within the business organization. The purpose of Branch is to business expansion and to face competition. The purpose of the Department is to improve operational activities and business performance. Branches are the outcome of tough competition and the expansion of a business. Departments are the result of fast human life.

Followings are the main differences between branch and department:

(a) Branches are separated from the main organization. Departments are attached to the main organization under a single roof.

(b) Branches are geographically classified (like different branch offices in different cities of the country). Departments are technically classified such as the production department, finance department, personnel department, etc.

(c) Branches are the outcome of tough competition and the expansion of the business. Departments are the result of fast human life.

(d) The chief executive who is to keep a constant watch over the departments supervises closely and controls effectively. Control is practically un-practicable in the case of a far-off branch since it is not possible for the Head Office to keep a constant watch.

(e) Branches are geographically separated. Departments are not separated rather existed under the same roof.

(f) A department is a technical area of an office which is under the same premises while the branch is an extension of the office with more or less the same features.

(g) Branches are of different types like dependent, independent and foreign. There is no such classification in the department because all are common under the same roof.

(h) The allocation of branch common expenses does not arise. The allocation of departmental common expenses is a tough job.

(i) Departmental trading with their Head Office is conducted under the same roof although each department deals with a separate line of activity. Branch trading is conducted in different parts of the country under the Head Office dealing with usually the same line of activity.

(j) To find out the net result of the organization, the reconciliation of different branch account is the main job. In departmental accounting, no reconciliation is necessary because there is a central account division.


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