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Control Accounts (Notes)

The document discusses control accounts, their purposes and types. Control accounts are used to locate errors, provide totals for receivables and payables, and check balances. Sales and purchase ledger control accounts track the totals in those ledgers. The sources of information and balances in the control accounts are explained.

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Mosheikh Plays
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20 views

Control Accounts (Notes)

The document discusses control accounts, their purposes and types. Control accounts are used to locate errors, provide totals for receivables and payables, and check balances. Sales and purchase ledger control accounts track the totals in those ledgers. The sources of information and balances in the control accounts are explained.

Uploaded by

Mosheikh Plays
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Control Accounts

Purposes/uses of control accounts

 To locate/detect errors
 To provide total figure for receivables and payables
 To provide a check on arithmetical accuracy of balances in sales and purchase ledger
 To facilitate the preparation of final accounts from incomplete records
 To deter against fraud

Types of Control
Account

Sales Ledger Purchase Ledger


Control Account Control Account

Total Trade Total Trade


Receivables Payables

Current Assets Current Liabilities


Dr Cr Dr Cr
Sales Ledger Control Account/Total Receivables Account

$ $
Balance b/d √ Balance b/d (if given) √
Credit sales √ Sales return √
Refunds to customer √ Receipts (Cash & Cheque) √
Dishonoured cheque √ Discount allowed √
Interest on overdue balances √ Contra/Set-off √
Bad debts √
Balance c/d (if given) √ Balance c/d √

Balance b/d √ Balance b/d (if given) √

Source of information for sales ledger control account

 Balance b/d is extracted from the list of balances in sales ledger.


 Sales journal credit sales
 Return inward journal sales return
 Cash book receipts, refunds, discount allowed & dishonoured cheque
 General journal contra, interest on overdue balances, bad debts

Reasons of credit balance in sales ledger control account

 Advance payment by receivables


 Overpayment by receivables

Meaning of contra/set-off

If a person is our receivable and payable at the same time, the cancellation of any
amount/balance with that person without cash/cheque is called contra.

Precaution

Cash sales and provision for doubtful debts should not be recorded in sales ledger control
account even if given in question.
Purchase Ledger Control Account/Total Payables Account

$ $
Balance b/d (if given) √ Balance b/d √
Purchases return √ Credit Purchases √
Payments (Cash & Cheques) √ Interest on overdue balances √
Discount received √ Refunds from suppliers √
Contra/Set-off √
Balance c/d √ Balance c/d (if given) √
√ √
Balance b/d (if given) √ Balance c/d √

Source of information for purchase ledger control account

 Balance b/d is extracted from the list of balances in purchase ledger.


 Purchases journal credit Purchases
 Return outward journal Purchases return
 Cash book Payments, refunds, discount received
 General journal contra, interest on overdue balances

Reasons of debit balance in purchase ledger control account

 Advance payment to payables


 Overpayment to payables

Precaution

Cash purchases should not be recorded in purchase ledger control account even if given in
question.

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