Control accounts
1. What is meant by control account?
Control accounts are also known as total accounts. These are prepared to check the arithmetical accuracy of the
ledgers they control. These help us locate any error when the trial balance fails to balance.
2. Write 2 advantages of control account.
It helps us check the arithmetical accuracy of the ledgers they control and locate any error.
It shows the total of trade receivables and trade payable immediately. So draft final account can be
prepared
3. Explain why the information used for preparing control account must be obtained from books of prime entry.
The information used for preparing control account must be obtained from books of prime entry so that it can
check the arithmetical accuracy of the ledgers they control and locate any error.
4. Explain how it is possible for a debtor’s account to have a credit balance or creditor’s account to have a debit
balance.
Because of an overpayment
Returning goods after paying the account
Cash discount not being deducted.
5. What is meant by contra entries?
Contra entries are also known as inter ledger transfers or set-offs. These are made to record the balance
transferred from purchase ledger account to sales ledger account when a business is both a customer and a
supplier.
6. List out 2 information not shown on control account and explain why?
Cash sales and provision for doubtful debts are not recorded in control account because these do not affect debtors
and creditors account.
7. List out the source of information of the following items.
Items Source of information
Credit sales Sales journal
Sales return Sales return journal
Cash and cheque received from customer Cash book
Dishonored cheque Cash book
Discount allowed Cash book
Refund to debtor Cash book
Bad debts written off Journal
Interest charged on customer ‘s overdue Journal
Credit purchase Purchase journal
Purchase return Purchase return journal
Cash and cheque paid to supplier Cash book
Discount received Cash book
Refund from supplier Cash book
Interest charged by supplier Journal
Prepared by Md.Mustafizur Rahman, Cambridge Examiner for O& A level Accounting &
Senior Teacher, DPS STS School, Uttra
Control accounts
8. Write where the following items to be recorded in the sales ledger control account.
Items Sales ledger control account/ total debtors account
Credit sales Debit
Sales return Credit
Cash and cheque received from customer Credit
Dishonored cheque Debit
Discount allowed Credit
Refund to debtor Debit
Bad debts written off Credit
Interest charged on customer ‘s overdue Debit
Cash sales No entry
Provision for doubtful debts No entry
9. Write where the following items to be recorded in purchase ledger control account.
Items Purchase ledger control account/total creditors accounts
Credit purchase Credit
Purchase return Debit
Cash and cheque paid to supplier Debit
Discount received Debit
Refund from supplier Credit
Interest charged by supplier Credit
10. Required journal entries for the following transactions:
Interest charged on overdue by suppliers.
Interest payable a/c debit
Supplier a/c credit
Interest charged on customer’s overdue.
Trade receivable a/c debit
Interest receivable a/c credit
Contra entries / set off
Purchase ledger control a/c debit
Sales ledger control a/c credit
Prepared by Md.Mustafizur Rahman, Cambridge Examiner for O& A level Accounting &
Senior Teacher, DPS STS School, Uttra
Control accounts
Rules to prepare amended Control account and revised ledger:
If any transaction affects the total of daybooks or control a/c, it will be corrected in amended
control account
If any transaction affects an individual ledger account (customer/ supplier), it will be adjusted in
revised ledger.
On 1st April 2010 Mr. ashiqur had the following balances:
Sales ledger control account debit balance $ 15000
Credit balance $ 2000
Purchase ledger control account debit balance $ 3000
Credit balance $ 15000
The following transactions took place during the month of april:
$
Credit sales 30000
Sales return 2000
Cash and cheque received from customer 12000
Dishonored cheque 3000
Discount allowed 1000
Refund to debtor 2000
Bad debts written off 100
Cash sales 4000
Provision for doubtful debts 700
Interest charged on customer ‘s overdue 200
Transfer from purchase ledger to sales ledger account 500
Credit purchase 25000
Purchase return 5000
Cash and cheque paid to supplier 10000
Discount received 100
Refund from supplier 2000
Interest charged by supplier 100
On 30th April, sales ledger credit balance 500
Purchase ledger debit balance 1000
Required : Prepare purchase and sales ledger control account.
Prepared by Md.Mustafizur Rahman, Cambridge Examiner for O& A level Accounting &
Senior Teacher, DPS STS School, Uttra
