Scribd
Upload
2 views3 pages

Control Account

The document outlines the structure and purpose of sales and purchases ledger control accounts, which are memorandum accounts used to verify the accuracy of sales and purchases ledgers. It highlights the advantages of control accounts, including error detection, quick financial statement preparation, fraud prevention, and verification of arithmetic accuracy. Additionally, it explains contra entries, where mutual debts between a credit customer and supplier can be offset.

Uploaded by

Saddam Amir Haque
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
2 views3 pages

Control Account

The document outlines the structure and purpose of sales and purchases ledger control accounts, which are memorandum accounts used to verify the accuracy of sales and purchases ledgers. It highlights the advantages of control accounts, including error detection, quick financial statement preparation, fraud prevention, and verification of arithmetic accuracy. Additionally, it explains contra entries, where mutual debts between a credit customer and supplier can be offset.

Uploaded by

Saddam Amir Haque
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

Control Account

Sales ledger control account/ trade receivables control account


A memorandum account used to check the accuracy of the sales ledger.
Format
Sales Ledger Control Account
Date Details $ Date Details $
Jan 1 Balance b/d XXX Jan 1 Balance b/d XXX
Dec 31 Credit sales XXX Dec 31 Sales returns XXX
Dec 31 Dishonoured cheques XXX Dec 31 Discount allowed XXX
Dec 31 Interest on Customers XXX Dec 31 Bank XXX
Dec 31 Refunds to customers XXX Dec 31 Irrecoverable debts XXX
Dec 31 Balance c/d XXX Dec 31 Contra/ Set off XXX
Dec 31 Balance c/d XXX
XXX XXX
Jan 1 Balance b/d XXX Jan 1 Balance b/d XXX

Purchase ledger control account/ trade payables control account


A memorandum account used to check the accuracy of the purchases ledger.
Format
Purchases Ledger Control Account
Date Details $ Date Details $
Jan 1 Balance b/d XX Jan 1 Balance b/d XXX
X
Dec 31 Bank XX Dec 31 Credit Purchases XXX
X
Dec 31 Discount received XX Dec 31 Interest by suppliers XXX
X
Dec 31 Purchases returns XX Dec 31 Refunds from suppliers XXX
X
Dec 31 Contra/Set off XX Balance c/d XXX
X
Dec 31 Balance c/d XX
X

XX XXX
X
Jan 1 Balance b/d Jan 1 Balance b/d XXX
Purpose of a Control Account
 A sales ledger control account gives a summary of all transactions with credit
customers
 A purchases ledger control account gives a summary of all transactions with
credit suppliers
Advantages of using a control account
 Control accounts can be used to assist in the location of errors
 Errors are present if the balance on the control account does not match the
total from the relevant ledger accounts
 The total figure for trade receivables or trade payables is shown
 This enables the statement of financial position to be prepared quickly
 Control accounts help to reduce and prevent fraud
 Different people prepare control accounts and ledger accounts
 Therefore, any discrepancies will be spotted
 Control accounts can prove the arithmetical accuracy of the sales or purchases
ledger
 If the balance on the control account matches the total of the ledger accounts
then there are no arithmetic errors
What are contra entries?
 A person or business may be both a credit customer and a credit supplier
 If a business owes some money to a person but is also owed money by that
person then they can agree to offset the common balance
This is known as a contra entry

You might also like