What is a control account in accounts?
In accounting, the controlling account (also known as an adjustment or control account) is an account in the general ledger for which a corresponding subsidiary ledger has been created. The subsidiary ledger allows for tracking transactions within the controlling account in more detail.
What are the two types of control account?
Usually, companies generate two types of control accounts: sales ledger control accounts and payable ledger control accounts.
What are three purposes of control accounts?
- These accounts can extract debtors or creditors balance from a single account.
- It can check the arithmetical accuracy of the accounts which are posted in ledger.
- It can locate the error in individual or personal accounts.
- It can set off the debtor’s account with a creditor account.
What is control account example?
An Example of a Control Account Typically, this includes total credit sales for a day, total collections from customers for a day, total returns and allowances for a day, and the total amount owed by all customers.
What are advantages of control account?
Advantages of Control Accounts: (i) Control accounts provide a summary of transactions recorded in various subsidiary ledger. Hence these are very useful to management in policy formulation. (ii) It makes possible the division of accounting work among ledger keepers, thereby resulting in specialisation in work.
What type of account is a control account?
A control account is a summary-level account in the general ledger. This account contains aggregated totals for transactions that are individually stored in subsidiary-level ledger accounts.
How do you reconcile control accounts?
To reconcile your Creditors Control account, you check that the balance of the account matches the total outstanding value on your supplier accounts, as shown on the Aged Creditors Report. You can do this for all your transactions or up to a date in the past, such as the end of your previous month.
What are the benefits of control accounts?
Advantages of Control Accounts
- Provides a checking mechanism to detect errors and fraud at an early stage;
- Removes bulky details from the general ledger;
- Larger companies can set up accounting departments for specific areas;
- Trial balance figures provide a summary of totals, rather than individual accounts;
What is the benefit of control account?
The purpose of the control account is to keep the general ledger nice and clean without any details, yet contain the correct balances to be used in the financial statements. Many of the accounts seen in the financial statements, take cash for instance, is shown as the control account in the balance sheet.