Errors

CONTROL ACCOUNTS

Control account may be defined as a total account inserted in a ledger to make it self balancing. The balance of this account should be similar to the total of the detailed balances of the ledger giving proof of the arithmetical accuracy of the bookkeeping entries in the ledger.

Control accounts represent total of all accounts in some other ledgers. the accuracy of these ledgers is proved by the control accounts and they are also called self balancing or adjustment accounts.

Control accounts serve the purpose of trial balances which can be extracted for different types of ledgers like debtor’s ledger or creditors’ ledger.

Control accounts can be debtors/creditors control accounts.

Control accounts are helpful in enabling managers to detect the frauds and discrepancies. If a person in charge of any particular ledger wants to make some incorrect entries to disguise some frauds then control account will disclose such efforts.

The principle on which control accounts operate is as follows:

Total opening balances 1st Jan ***

Add total entries which have increased the balances ***

Less total entries which have reduced the balances (***)

Total closing balance ***

Because totals are used , the accounts are often known as total accounts. Thus a control account for a sales ledger is known as a sales ledger control account.

A control account for a purchases ledger is known as a purchases ledger control account.

Control accounts are not necessarily a part of double entry but some large firms would incorporate them as part of double entry.

Sales ledger control account /debtors ledger control account.

Format

|DEBTORS/SALES LEDGER CONTROL ACCOUNT |

|balance b/f at beginning |total cash...