Edexcel IGCSE Accounting: Your notes
Introduction to Bookkeeping &
Accounting
Control Accounts
Contents
Purpose of a Control Account
Trade Receivables Ledger Control Account
Trade Payables Ledger Control Account
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 1
Purpose of a Control Account
Your notes
Purpose of a control account
What is a control account?
A control account is a summary of all balances and transactions for trade receivables
or for trade payables
A trade receivables ledger control account summarises all the transactions for
trade receivables
A trade payables ledger control account summarises all the transactions for trade
payables
The totals are found using the books of original entry rather than the ledger accounts
This is so that errors in the ledger accounts can be easily identified
The closing balance is found for the control account and compared to the sum of the
closing balances in the receivables ledger accounts or the payables ledger accounts
If there are no errors, these figures will be equal
What is the purpose of a control account?
To provide a summary of transactions for that type of account
A trade receivables ledger control account gives a summary of all transactions with
credit customers
A trade payables ledger control account gives a summary of all transactions with
credit suppliers
What are the 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 trade receivables or trade
payables ledger
If the balance on the control account matches matches the total of the ledger
accounts then there are no arithmetic errors
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 2
However, there still could be other errors
Do control accounts identify all errors? Your notes
Control accounts do not identify all errors
This is similar to the trial balance
The following errors are not identified
Errors of commission
Errors of omission
When a transaction is not entered into the books of original entry
Errors of original entry
When a transaction is entered into the books of original entry with an incorrect
amount
Compensating 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
The offset is done without any exchange of money
The book of original entry for contra entries is the general journal
Journal entries will be made with a narrative
Entries will then be made to the ledger accounts:
Debit the trade payables account
Credit the trade receivables account
Case Study
Aadam owes Brie $500. Brie owes Aadam $300.
Instead of paying each other $300, they agree to offset Brie's balance against
Aadam's. This means they each reduce their balance by $300 without exchanging any
money.
Aadam now owes Brie $200. Brie now does not owe any money to Aadam.
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 3
Trade Receivables Ledger Control Account
Your notes
Trade receivables ledger control account
What is a trade receivables ledger control account?
A trade receivables ledger control account is an account that summarises all the
transactions for trade receivables
It is not part of the double entry system
Where do I find the information to complete a trade
receivables ledger control account?
The books of original entry are used to find the totals
The sales day book is used to find the total value of credit sales
The sales returns day book is used to find the total value of returned goods
The cash book is used to find the total values for:
Money received from credit customers
Money refunded to credit customers
Cash discounts allowed to credit customers
Dishonoured cheques received from credit customers
The journal is used to find the total values for:
Interest charged to credit customers on overdue accounts
Contra entries against the purchases ledger
Irrecoverable debts written off
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 4
Your notes
Examiner Tips and Tricks
The ledger accounts are not used when preparing control accounts. The information
is taken from the books of original entry.
Why might there be a credit balance in a trade
receivables ledger control account?
A trade receivables account will usually have a debit balance
This indicates that the credit customer owes the business money
However, a trade receivables account could have a credit balance
This indicates that the credit customer is owed money
Credit balances can occur when:
Credit customers pay in advance of buying goods
Credit customers make an overpayment
The business owes refunds to credit customers
The customers have paid for goods and then returned them
Debit and credit balances are totalled separately in the trade receivables ledger
control account
This means there could be two opening balances and two closing balances
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 5
What is the layout of a trade receivables ledger control
account? Your notes
The layout looks very similar to the layout of a trade receivables ledger account
The main differences are:
There could be two opening balances
There could be two closing balances
Use the name of the book of original entry as the detail
Put more information in brackets
Entries on the debit side: Entries on the credit side:
Opening balance Opening balance
Credit customers who owe money Credit customers who are owed
money
Sales day book
Sales returns day book
Credit sales only
Credit sales only
Journal
Cash book
Interest
Bank
Cash book
Bank transfers from credit
Dishonoured cheques from credit customers
customers
Cash
Cash received from credit
customers
Discount allowed
Journal
Irrecoverable debts
Contra entries
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 6
Your notes
Layout of a trade receivables ledger control account
Examiner Tips and Tricks
Remember that cash sales are not recorded in the receivables ledger. Only enter cash
received from credit customers when the cash is used to make a payment towards an
invoice.
Worked Example
Kimi maintains a full set of account records. She provides the following information
for February 2024.
On 1 February 2024
Trade receivables ledger control account debit balance b/d 12 780
Trade receivables ledger control account credit balance b/d 150
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 7
Totals for February 2024
Credit sales 25 470 Your notes
Cash sales 5 780
Credit sales returns 7 000
Cheques received by credit customers 18 450
Cash received by credit customers 1 400
Discount allowed 3 290
Interest charged to credit customers 860
Contra purchases ledger 1 050
Irrecoverable debts written off 870
At 29 February, the total amount that Kimi owed to her credit customers was $460.
Prepare the trade receivables ledger control account for February 2024. Balance the
account and bring down the balances on 1 March 2024.
Answer
Ignore the cash sales, as they do not affect the receivables ledger accounts.
Enter the balances and totals on the correct sides of the account.
Transactions which increase the amount owed to the business appear on the debit
side.
Credit sales
Interest
Transactions which reduce the amount owed to the business appear on the credit
side.
Receipts from credit customers using cash or bank transfers
Sales returns
Discount allowed
Irrecoverable debts
Contra entries
On 1 March 2024, there will be a credit balance of $460; therefore, there will need to
be a balance c/d on the debit side on 29 February 2024.
Kimi
Trade Receivables Ledger Control Account
Date Details $ Date Details $
2024 2024
12 780 Balance b/d 150
Feb 1 Balance b/d Feb 1
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 8
29 Sales day book 25 470 29 Sales returns day book 7 000
29 Journal (interest) 860 29 Cash book (bank) 18 450 Your notes
29 Balance c/d 460 29 Cash book (cash) 1 400
29 Cash book (discount allowed) 3 290
29 Journal (contra) 1 050
29 Journal (irrecoverable debts) 870
29 Balance c/d 7 360
39 570 39 570
Mar 1 Balance b/d 7 360 Mar 1 Balance b/d 460
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 9
Trade Payables Ledger Control Account
Your notes
Trade payables ledger control account
Where do I find the information to complete a trade
payables ledger control account?
The books of original entry are used to find the totals
The purchases day book is used to find the total value of credit purchases
The purchases returns day book is used to find the total value of returned goods
The cash book is used to find the total values for:
Money paid to credit suppliers
Money refunded by credit suppliers
Cash discounts received from credit suppliers
The journal is used to find the total values for:
Interest charged by credit suppliers on overdue accounts
Contra entries against the sales ledger
Examiner Tips and Tricks
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 10
The ledger accounts are not used when preparing control accounts. The information
is taken from the books of original entry.
Your notes
Why might there be a debit balance in a trade payables
ledger control account?
A trade payables account will usually have a credit balance
This indicates that the business owes the credit supplier money
However, a trade payables account could have a debit balance
This indicates that the credit supplier owes the business money
Debit balances can occur when:
The business pays credit suppliers in advance
The business makes overpayments to credit suppliers
The business is owed refunds from the credit suppliers
The business has paid for goods and then returned them
Debit and credit balances are totalled separately in the trade payables ledger control
account
This means there could be two opening balances and two closing balances
What is the layout of a trade payables ledger control
account?
The layout looks very similar to the layout of a trade payables ledger account
The main differences are:
There could be two opening balances
There could be two closing balances
Use the name of the book of original entry as the detail
Put more information in brackets
Entries on the debit side: Entries on the credit side:
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 11
Opening balance Opening balance
Money that credit suppliers owe Money owed to credit suppliers Your notes
Purchases returns day book Purchases day book
Credit purchases only Credit purchases
Cash book Journal
Bank Interest
Bank transfers to credit suppliers
Cash
Cash paid to credit suppliers
Discount received
Journal
Contra
Layout of a trade payables ledger control account
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 12
Examiner Tips and Tricks
Remember that cash purchases are not recorded in the payables ledger. Only enter
Your notes
cash paid to credit suppliers when the cash is used to make a payment towards an
invoice.
Worked Example
Mika is a trader. He has provided the following information
2023 $
1 March Trade payables ledger control account credit balance 17 150
Trade payables ledger control account debit balance 1 350
2024
29 February Totals for the year:
Credit purchases 231 200
Cash purchases 5 000
Bank payments to credit suppliers 210 600
Cash payments to credit suppliers 1 500
Returns to credit suppliers 6 400
Discount received 3 200
Contra entries 2 100
Interest charged by credit suppliers 800
Trade payables ledger control account credit balance ?
Trade payables ledger control account debit balance 450
Prepare the trade payables ledger control account for the year ended 29 February
2024. Balance the account and bring down the balances on 1 March 2024.
Answer
Ignore the cash purchases, as they do not affect the payables ledger accounts.
Enter the balances and totals on the correct sides of the account.
Transactions which increase the amount the business owes appear on the credit side.
Credit purchases
Interest
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 13
Transactions which reduce the amount the business owes appear on the debit side.
Payments to credit suppliers using cash or bank transfers Your notes
Purchases returns
Discount received
Contra entries
At the end of the month, there is a $450 debit balance. On 1 March 2024, there will be
a debit balance of $450; therefore, there will need to be a balance c/d on the credit
side on 29 February 2024.
Mika
Trade Payables Ledger Control Account
Date Details $ Date Details $
2023 2023
1 350 Balance b/d 17 150
Mar 1 Balance b/d Mar 1
2024 2024
Purchases day 231 200
Feb Cash book (bank) 210 600 Feb book
29 29
29 Cash book (cash) 1 500 29 Journal (interest) 800
29 Purchases returns day 6 400 29 Balance c/d 450
book
29 Cash book (discount 3 200
received)
29 Journal (contra) 2 100
29 Balance c/d 24 450
249 600 249 600
Mar 1 Balance b/d 450 Mar 1 Balance b/d 24 450
© 2025 Save My Exams, Ltd. Get more and ace your exams at [Link] 14