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CONTROL ACCOUNT Notes

Control accounts act as a summary of transactions recorded in the sales and purchases ledgers. There are two main control accounts: 1) the sales ledger control account which summarizes all transactions involving debtors, and 2) the purchases ledger control account which summarizes transactions involving creditors. Both control accounts have debit and credit sides and help locate errors, check accuracy, and provide balances of total debtors and creditors.

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3K views

CONTROL ACCOUNT Notes

Control accounts act as a summary of transactions recorded in the sales and purchases ledgers. There are two main control accounts: 1) the sales ledger control account which summarizes all transactions involving debtors, and 2) the purchases ledger control account which summarizes transactions involving creditors. Both control accounts have debit and credit sides and help locate errors, check accuracy, and provide balances of total debtors and creditors.

Uploaded by

ndumiso
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CONTROL ACCOUNT

Control accounts are sometimes known as total accounts. A control account act as a
summary of the ledger which it controls. There are two control accounts.
1. Sales ledger control account / Total debtors account
2. Purchases ledger control account / Total creditors account.

1. Sales Ledger Control Account: It resembles the account of an individual debtor. It is


an account recording in total the transactions affecting all the debtors.
Sources Of Information for Sales Ledger Control Account:
 Sales Sales Book
 Cash and Cheques received Cash Book
 Dishonoured Cheques Cash Book
 Discount allowed Cash Book
 Bad debts Journal
2. Purchases Ledger Control Account: It resembles the account of an individual
creditor. It records the transactions effecting all the creditors.
Sources Of Information For This Account:
 Purchases Purchase Book
 Purchases Returns Purchase Returns Book
 Cash and cheque paid Cash Book
 Discount received Cash Book
 Cash refunds from creditors Cash Book
Note:
 Cash sales / purchases are not recorded in the ledger control account
 Provision for doubtful debts don’t feature in sales ledger control account because
the provision accounts are kept in the general ledger not the sales ledger.
 Bad debts recovered are not recorded in sales ledger control accounts.
 Contra (inter- ledger transfer) or “set off” it’s a double entry which may arise
when we have one person who is trade receivable ( debtor) and trade payable
( creditor ) at the same time ,so we off set S.L.C.A credit against P.L.C.A debit
by the same amount
Advantages Of Control Account:
1. It helps in locating errors.
2. It helps in checking the arithmetical accuracy of the ledger it controls.
3. It gives us readymade figures for Total debtors and Total creditors on a certain
date.
4. Fraud is made more difficult by the use of control account
Form of control accounts:
Sales Ledger Control Account
Debit side Credit side
 Total of sales ledger debit balances  Total of sales ledger credit balances
brought forward from previous period brought forward from previous period
(b/d)  Sales returns for period
 Credit sales for period  Cash received from trade receivables
 Refunds to customers (cash book)  Cash discount allowed.(cash book)
 Dishonoured cheques cash book)  Bad debts written off. (journal)
 Interest charged to customers on  Sales ledger balances in purchases
overdue accounts. (journal) ledger “ contra” (journal)
 Total any sales ledger credit  Total any sales ledger debit balances
balances at end of period carried at end of period carried forward
forward.

Purchases Ledger Control Account


Debit side Credit side
 Total of Purchases ledger debit  Total of Purchases ledger credit
balances (if any) brought forward balances brought forward from
from previous period previous period
 Total of goods returns to suppliers  Total Credit purchases for period
 Total cash paid to suppliers.  Refunds from suppliers (cash book)
 Cash discount received (cash book)  Interest charged by suppliers on
 Purchase ledger balances off set overdue invoices
against balances in sales ledger  Total of debit balances if any at end
“contra” (journal) of period carried forward.
 Total of credit balances at end of
period carried forward

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