Control accounts

• Control accounts

  A type of trial balance which is prepared especially for the purchases and sales ledgers
• Control account


  Also called total accounts
• Types of Control accounts

  • Sales Ledger Control Account
  • Purchases Ledger Control Account
• Sales Ledger Control Account

  Shows information on total debtors
• Purchases Ledger Control Account

  Shows information of total creditors
• Uses of control accounts

  • To locate errors
  • To check the arithmetical accuracy of the purchases and sales ledgers
• Advantages of Control account

  • It reduces the possibility of fraud
  • It gives management an idea of the outstanding balance by credit customers (debtors)
  • Management can obtain information about debtors and creditors quickly
• The sales ledger gives information on each debtor while the sales ledger Control account gives information on ALL/TOTAL debtors
• Items debited in the sales ledger Control account

  • Balance b/f
  • Total credit sales
  • Dishonored cheques
  • Cash refund / Overpayment
  • Interest on debt
  • Interest charged on customers overdue
  • Excess cash collected due to late payment
  • Balance c/d
  • Balance b/d
• Items credited in the sales ledger control account


  • Balance b/f
  • Return inwards journal total
  • Cheque received from debtors
  • Set off/contra
  • Discount allowed
  • Bad debt (written off)
  • Interest on late payment received
  • Balance c/d
  • Balance b/d
• Items debited in the purchases ledger control account

  • Balance b/f
  • Return outwards total
  • Cash paid to creditors
  • Cheque paid to creditors
  • Set off (contra)
  • Discount received
  • Prepayment to suppliers
  • Balance c/
  • Balance b/d
• Items credited in the purchases ledger Control account

  • Balance b/f
  • Total credit purchases
  • Cash refund /overpayment
  • Interest on debt
  • Interest charged by suppliers on overdue
  • Dishonored cheques from creditors
  • Late payment charge
  • Balance c/d
  • Balance b/d
• Set off occurs where a business is both a debtor (customer) and a creditor (supplier). In such a case,the smaller sum owed is set off against the larger sum and the difference will be paid by cash or cheque. In both cases though, set off would reduce the amount the business owed its creditors and the debtors owed the business.
• Sales Ledger Control Account balance

  Generally carries a debit balance b/f (because debtors are asset and asset carries a DEBIT balance) but sometimes, the sales ledger control account can have a credit balance b/f
• If two opening balances (B/F) are given for the sales ledger control account, the bigger of the two will go on the debit side of the account and the smaller one on the credit side
• If two closing balances are given for the Sales Ledger control account, the bigger one will have the balance C/D on the credit side of the account (in order to have the balance b/d on the debit side) and the smaller one will have Balance C/D on the debit side of the account (in order to have the balance b/d on the credit side)
• Purchases Ledger Control Account balance

  Generally carries a credit balance b/f (because creditors are liability and liability carries a CREDIT balance) but sometimes, the purchases ledger control account can have a debit balance b/f
• If two opening balances (B/F) are given for the purchases ledger control account, the bigger of the two will go on the credit side of the account and the smaller one on the debit side
• If two closing balances are given for the Purchases Ledger control account, the bigger one will have the balance C/D on the debit side of the account (in order to have the balance b/d on the credit side) and the smaller one will have Balance C/D on the credit side of the account (in order to have the balance b/d on the debit side)
• If one Balance b/f is given for the sales ledger control account, it should go on the debit side of the account unless told otherwise
• If one Balance b/f is given for the purchases ledger control account, it should go on the credit side of the account unless told otherwise
• It is possible to be given one closing balance and you have to find a second balance in any of the control Accounts