Kwame Nkrumah University of

Science & Technology, Kumasi, Ghana

ACF 255
FINANCIAL ACCOUNTING 1
LESSON 6
Control Accounts

Department of Accounting and Finance

Dr Abukari Salifu Atchulo

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Learning Objectives Explain Control Accounts

Understand the purpose

of control accounts

Identify and prepare the Sales

Ledger/Debtors Ledger Control
Accounts and Purchases Ledger/
Creditors Ledger Control Accounts

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 Meaning of Control Accounts
• Control account refers to an Examples of control accounts could
account that picks the summary of include:-
all transactions posted into the The sales ledger control The purchases ledger
individual accounts in a given account, which control account, which
summarizes the individual summarizes the individual
ledger. customer accounts supplier accounts

• An A/C in the general ledger to

control individual A/Cs in a
subsidiary Ledger.
It is built with the totals of all
transactions that have individually been
• Used to check the accuracy of the posted into the various accounts.
entries in the individual accounts
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Purposes/Functions Locate errors;
of Control Accounts
• Control A/c balance must be the same as the totals of balances
on individual A/c’s in the relevant subsidiary ledger

Provide a summary of the total of debtors and

creditors

Cross-check to avoid fraud

Facilitates quick decision making

Facilitates the preparation of trial balance and final

accounts

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Kinds of Ledgers & Control Accounts

General Ledger

Subsidiary Ledgers;

• Sales Ledger or Debtors

Ledger
• Purchase Ledger or
Creditors Ledger

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Kinds of Ledgers & Control Accounts

Receivables/Sales Ledger Control A/C

• Used to keep track of all
transactions with credit customers or
debtors
Control Payables/Purchases Ledger Control A/C
Accounts • Used to keep track of all
transactions with credit suppliers or
creditors

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 Sales Ledger Control Account
Sales Ledger Control Account
Balance b/d xxx Balance b/d xxx
Sales (credit) xxx Sales returns xxx
Cash/Bank refunds xxx Cash/Bank xxx
Bank (Dishon’d cheques) xxx Discounts allowed xxx
Interest on overdue
Sales Ledgerbals
Control xxx
Account Balance set offs xxx
Bad debts recovered xxx Bad debts written off xxx
Bills receivables dishon’d xxx Bills receivables xxx
Balance c/d xx Balance c/d xxx
xxx xxx
Balance b/d xxx Balance b/d xx
www.knust.edu.gh

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 Sources of information for Debtors Control Account

Item Source
• Opening debtors Totals on sales
Debtors schedule
• Credit sales or list from the
daybook or sales
journal for the
Returns inwards
journal totals
previous period
current period
• Returns inwards
• Cash and cheques received Cashbook total for
receipts from
General journal
entries to that
Cashbook debit
debtors on the side
• Bad debts written off receipts side. effect

• Discount allowed Debtors

schedule or list
• Closing debtors from the end of
the period

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 Purchases Ledger Control Account
Purchases Ledger Control Account
Balance b/d xxx Balance b/d xxx
Purchases returns xxx Purchases (credit) xxx
Cash/Bank xxx Cash/cheque refunds xxx
Discounts received xxx Interest on overdue bals. xxx
Bills payables xxx Bills payables dishon’d. xxx
Balance set offs xxx Balance c/d xxx
Balance c/d xxx
xxx xxx
Balance b/d xxx Balance b/d
xxx
www.knust.edu.gh

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 Sources of information for Creditors Control Account
Source Item
• creditors schedule or list from the
previous period Opening Credit
• Totals on Purchases daybook or creditors purchases
purchases journal for the current
period Cash and
• Returns outwards journal totals Returns cheques
• Cashbook total for payments to
outwards paid to
creditors on the payment/credit side.
creditors
• Cashbook credit side Discount Closing
• creditors schedule or list from the end received creditors
of the period
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Example

Worksheet

www.knust.edu.gh

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