Control Accounts Act : Mini Trial Balances

1645 Words7 Pages
A control account is a summary account in the general ledger. This account comprises of combined totals for transactions that are discretely stored in subsidiary-level ledger accounts. It’s called a control account because it controls a section of the ledger. For instance a sales ledger control account controls the sales ledger while a purchase ledger controls the purchase ledger. (Accountingtools.com, 2015) Control accounts act as mini trial balances since they are summary accounts hence they are used to summarize the accounts receivable and accounts payable because these areas contain a huge volume of transactions hence need to be divided into subsidiary ledgers rather than being mixed-up in the general ledger which contains too much…show more content…
Responsibilities should be divided whereby the person keeping the sales or purchase ledgers will not have access to the control account in the general ledger and another person posting entries to the accounts will act as a check on a different person whose job is to post entries to the sales and purchase ledger accounts. The control accounts can help identify ledgers in which errors have been made when there is a difference in a trial balance. It assists in the location of errors where posting to the control accounts are made daily or weekly or even monthly. However if a clerk fails to record an invoice or a payment in a personal account or makes a transaction error, it would be a difficult task to locate the error at the end of a year given the fact that many transactions have been made during the year. By using the control account, a contrast with the individual balances in the sales or purchase ledger can be completed in a week or a day of the month and the error can be detected much more quickly. The use of control accounts makes it much quicker and simpler when the debtors and creditors figures can be determined quickly for construction of the trial balance than having to balance off each individual personal account in the sales and purchases ledgers which is quite time saving. ANSWER 1 (B) A control account is so called because it controls a section
Open Document