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Control Accounts

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Amanda Abraham

on 15 September 2015

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Transcript of Control Accounts

Thank You!
A control account summarises a large number of transactions. This account is used to prove the accuracy of the ledger accounting system.
Main Entries in Control Accounts
Credit Sales

Dr. Receivables Control Account
Cr. Sales

Cash received

Dr. Bank/Cash
Cr. Receivables Control Account

Other Entries

Dr. Payables control account
Cr. Receivables control account

(for the maximum common amount)
Control Account Reconciliations
Control accounts and double entry
Control Accounts
Most businesses operate control accounts for trade receivables and payables, but such accounts may be useful in other areas too, e.g. sales tax control account.
Reconciliation between the control account total and the receivables ledger will help to detect errors, thus providing an important control.
Credit Purchases

Dr. Purchases
Cr. Payables control account

Cash paid

Dr. Payables control account
Cr. Bank/Cash
Credit Notes and refunds

Dr. Returns Inwards (Sales returns)
Cr. Receivables control account

(when a credit note is given)
Credit Notes and refunds

Dr. Receivables control account
Cr. Bank

(when the customer is refunded)
Interest charged on overdue accounts

Dr. Receivables control account
Cr. Interest receivable (Income I/S)
Errors which affect the control accounts

Over/undercast Sales day book, Purchaes day book, Cash book
Transposition error in posting total from Sales day book, purchases day book, Cash book to nominal ledger.
Entry omitted from Sales day book, Purchaes day book, Cash book.

Errors which affect the list of balances (receivables/payables ledger)

Omit balance from the list
List a debit balance as a credit/vice versa.
Transposition error in filling ledger from books of prime entry.

Errors which affect both the lists of balances and RLCA/PLCA

Details being incorrectly recorded on the original source documentation i.e. sales/purchase invoice.
Loss of original source documentation so it is not recognised anywhere in the system.
Full transcript