Classwork Series and Exercises {Financial Account – SS2}: Control Account

Financial Accounting, SS 2, Week 7

Topic: Control Account

Content

• Introduction to Control Account
• Uses of Control Account
• Classification of Control Account

Control Account

A control account is a summary-level account in the general ledger. This account contains aggregated totals for transactions that are individually stored in subsidiary-level ledger accounts. Control accounts are most commonly used to summarize accounts receivable and accounts payable, since these areas contain a large volume of transactions, and so need to be separated into subsidiary ledgers

Uses of Control Account

1. Control account are used to locate errors
2. Through control account fraud can be easily detected.
3. Management control is aided by the result of the speed at which information is obtainable
4. Internal check on ledger clerk
5. Easy detection of missing figure
6. Ascertainment of debtors and creditors balance
7. Preparation of interim final account
8. It saves time
9. It helps in the grouping of account

Classification of Control Account

1. Sales ledger control account
2. Purchase ledger control account

Sales ledger control account is also known as debtors debtors control account,it is the control account for sales debtors ledger this will represent all the entries posted in the sales ledger as if only one debtor existed

Format of Sales Ledger Control Account

Dr                                                                                                                       Cr

Balance b/f                    x                                                                 cash received from debtors       x

Sales on credit               x                                                                  cheque from customer             x

Interest charge              x                                                                   discount allowed                     x

Dishonored bill              x                                                                    bills receivable                       x

Carriage outward          x                                                                       allowance                            x

Discount disallowed      x                                                                       bad debt                              x

Debit note issued         x                                                                     return inward                         x

Payment to debtors for claim x                                                          credit note issued                    x

Service charges                x                                                                   contra setting                      x

Balance c/d                              x

Purchase ledger control account is also known as the total creditors control account,it is control account for purchases or creditors,this will represent all the entries posted to the ledger as if only one creditor existed

FORMAT FOR CREDITORS CONTROL ACCOUNT

Dr                                                                                                                                                                           Cr

Cheque to creditors             x                                                                                   balance b/f                   x

Cash to supplier                     x                                                                                purchase on credit       x

Discount received                 x                                                                                 cash fund                       x

Bills payable discount           x                                                                                    withdrawn                   x

Credit note received             x

Return outward                     x

Balance c/d                           x

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