Theory question 103
Control Accounts(a) State three uses of control account.
(b) List five items that are debited in the sales ledger control account.
(c) List four subsidiary books from which sales ledger control account is compiled.
Show the model answer
(a) Any three:
- Checks the arithmetical accuracy of the sales/purchases ledger.
- Helps to locate errors to a particular ledger.
- Gives quick totals of debtors and creditors for interim accounts.
- Acts as internal check against fraud by ledger clerks.
- Helps to find missing figures (e.g. credit sales) in incomplete records.
(b) Any five debit items: opening debtors balance; credit sales; dishonoured cheques; interest charged on overdue accounts; refunds to customers; bad debts recovered; closing credit balances (carried down); bills receivable dishonoured.
(c) Any four: sales day book; sales returns (returns inwards) day book; cash book; journal proper; bills receivable book.
Remember the debit side of the sales ledger control account is everything that increases what debtors owe.