If at the end of an accounting period the balance of the Investment in Branch ledger account in the accounting records of the home office is $20,000 and the balance of the Home Office account in the accounting records of the branch (after the branch recorded closing entries) is $25,500, the most likely explanation for the discrepancy of $5,500 is a:

Question

Quizplus · Accepted Answer

The discrepancy is likely due to the net income of the branch not recorded by the home office. The branch's equity in the home office's books would increase by the amount of net income not yet recorded by the home office, explaining the higher balance in the Home Office account in the branch's records.

If at the End of an Accounting Period the Balance