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    FA 2 Chapter 1 Control Accounts

    Uploaded by

    Mhd Amin
    Control accounts are used to control sections of the ledger, such as the sales ledger and purchase ledger. They act as checks on the accuracy of the subsidiary ledgers and help identify where errors have occurred when trial balances are out. The main types of control accounts are sales ledger and purchase ledger control accounts. Sales ledger control accounts track credit sales and cash/cheques received from customers, while purchase ledger control accounts track purchases and amounts owed to suppliers. Both use information from subsidiary ledgers and journals to ensure balances in the general ledger agree with totals of individual customer/supplier accounts.

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    FA 2 Chapter 1 Control Accounts

    Uploaded by

    Mhd Amin
    217 views19 pages
    Control accounts are used to control sections of the ledger, such as the sales ledger and purchase ledger. They act as checks on the accuracy of the subsidiary ledgers and help identify where errors have occurred when trial balances are out. The main types of control accounts are sales ledger and purchase ledger control accounts. Sales ledger control accounts track credit sales and cash/cheques received from customers, while purchase ledger control accounts track purchases and amounts owed to suppliers. Both use information from subsidiary ledgers and journals to ensure balances in the general ledger agree with totals of individual customer/supplier accounts.

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    kaw

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    Control accounts are used to control sections of the ledger, such as the sales ledger and purchase ledger. They act as checks on the accuracy of the subsidiary ledgers and help identify where errors have occurred when trial balances are out. The main types of control accounts are sales ledger and purchase ledger control accounts. Sales ledger control accounts track credit sales and cash/cheques received from customers, while purchase ledger control accounts track purchases and amounts owed to suppliers. Both use information from subsidiary ledgers and journals to ensure balances in the general ledger agree with totals of individual customer/supplier accounts.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    217 views19 pages

    FA 2 Chapter 1 Control Accounts

    Uploaded by

    Mhd Amin
    Control accounts are used to control sections of the ledger, such as the sales ledger and purchase ledger. They act as checks on the accuracy of the subsidiary ledgers and help identify where errors have occurred when trial balances are out. The main types of control accounts are sales ledger and purchase ledger control accounts. Sales ledger control accounts track credit sales and cash/cheques received from customers, while purchase ledger control accounts track purchases and amounts owed to suppliers. Both use information from subsidiary ledgers and journals to ensure balances in the general ledger agree with totals of individual customer/supplier accounts.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 19

    Financial Accounting 2

    Control Accounts

    Learning Outcomes

    To define control accounts


    The purpose of control accounts.
    The main types of control accounts.

    BM020-3-1 FA2

    Control Accounts

    Slide 2 of 19

    Uses of Control Accounts


    A control account is so called because it controls a
    section of the ledger.
    For example, a sales ledger control account controls
    the sales ledger; a purchase ledger controls the
    purchase ledger.
    If there is a difference on the trial balance, the control
    accounts will show whether or not any of the
    difference is in the sales or purchase ledgers.
    Control accounts are kept in the general ledger.
    BM020-3-1 FA2

    Control Accounts

    Slide 3 of 19

    Purpose of Control accounts


    To act as independent checks on the arithmetical
    accuracy of the balances in the sales and purchase
    ledgers.
    An added advantage of keeping control accounts in
    that they can act as mini trial balances, since they
    are summary accounts.
    To identify ledgers in which errors have been made
    when there is a difference on a trial balance.

    BM020-3-1 FA2

    Control Accounts

    Slide 4 of 19

    Purpose of Control accounts


    (cont)
    To act as an independent internal check
    on the work of the sales & purchase
    ledger clerks, to detect errors or fraud.
    Duties should be divided where the person
    keeping the sales or purchase ledgers will
    not have access to the control account in
    the general ledger.

    BM020-3-1 FA2

    Control Accounts

    Slide 5 of 19

    Form of Sales Control Account


    Sales Day Book/Sales Journal
    Sales ledger
    (customers account)

    General ledgers
    Sales ledger control
    account
    BM020-3-1 FA2

    Control Accounts

    Sales account

    Slide 6 of 19

    Sales Ledger Control Account


    (Debtors Control Account)

    Sales ledger

    Baba

    Ali

    Jan 8 Sales 1600

    Jan 15 Sales 2500

    Elan

    Chew
    Jan 19 Sales 1000

    BM020-3-1 FA2

    Jan 26 Sales 3500

    Control Accounts

    Slide 7 of 19

    General ledger
    Sales Account
    Jan 31 Credit sales for
    month

    BM020-3-1 FA2

    Control Accounts

    8,600

    Slide 8 of 19

    General ledger
    Sales Ledger Control Account
    20X9
    Jan 1
    Jan 31

    20X9
    Balance b/d
    Sales

    Feb 1 Balance b/d

    BM020-3-1 FA2

    1,600
    8,600
    10,200

    Jan 31 Balance c/d 10,200


    10,200

    10,200

    Control Accounts

    Slide 9 of 19

    Sales Ledger Control


    Jan 1
    Balance b/d
    xxxx
    Jan 31 Sales day book
    xxxxx
    (total of sales invoiced in the
    period

    Jan 31
    Returns inwards Day Book
    (total of all goods returned from
    debtors in the period)
    xxx
    Jan 31
    Cash book
    xxx
    (total of all cash received from
    debtors in the period)
    Jan 31
    Cash book
    xxx
    (total of all cheques received from
    debtors in the period)
    Jan 31
    Balance c/d
    xxx
    xxxxx

    xxxxx

    BM020-3-1 FA2

    Control Accounts

    Slide 10 of 19

    Example 1 of Sales Ledger Control Account

    Debit balances on 1 January 20X9


    Total credit sales for the month
    Cheques received from customers in the month
    Cash received from customers in the month
    Returns inwards from customers during the month
    Debit balances on 31 January as extracted
    from the sales ledger

    1894
    10290
    7284
    1236
    296
    3368

    Sales ledger control


    20X9
    Jan 1 Balances b/d
    Jan 31 Sales

    1894
    10290

    20X9
    Jan 31
    Jan 31
    Jan 31
    Jan 31

    Bank
    Cash
    Return Inwards
    Balances c/d

    7284
    1236
    296
    3368

    12184
    12184

    BM020-3-1 FA2

    Control Accounts

    Slide 11 of 19

    Information for sales ledger


    control account

    Exhibit 2.1 Source of information for sales ledger control account


    BM020-3-1 FA2

    Control Accounts

    Slide 12 of 19

    Form of Purchase Control Account


    Purchase Day Book/Purchase Journal
    Purchase ledger
    (creditors account)

    General ledgers

    Purchases Ledger control


    account

    BM020-3-1 FA2

    Purchases account

    Control Accounts

    Slide 13 of 19

    Purchase Ledger control account


    The total creditors account is also
    referred to as the Purchase ledger
    control account
    The credit balance in this account in the
    general ledger must always be equal to
    the total of the credit balances of the
    individual creditors accounts in the
    purchases ledger at a particular point in
    time.
    BM020-3-1 FA2

    Control Accounts

    Slide 14 of 19

    Purchase Ledger Control Account


    Purchase ledger

    Bob

    Sow

    Jan 3 Purchases 1,500

    Rama

    Tom

    Jan 18 Purchases 10,000

    BM020-3-1 FA2

    Jan 10 Purchases 4,500

    Control Accounts

    Jan 21 Purchases 4,000

    Slide 15 of 19

    General ledger
    Purchase Ledger control account
    20X9
    Jan 31

    Balance c/d 23,000

    20X9
    Jan 1 Balance b/d
    Jan 31 Purchases

    3,000
    20,000

    23,000
    23,000
    Purchases account
    Jan 31 Sundry creditors

    BM020-3-1 FA2

    20,000

    Control Accounts

    Slide 16 of 19

    Information for purchases ledger


    control account

    Exhibit 2.2 Source of information for purchases ledger control account


    BM020-3-1 FA2

    Control Accounts

    Slide 17 of 19

    Question and Answer Session

    Q&A
    BM020-3-1 FA2

    Control Accounts

    Slide 18 of 19

    What we will cover next


    Errors and Adjustment

    BM020-3-1 FA2

    Control Accounts

    Slide 19 of 19

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