Theory question 101
Control Accounts(a) Identify three books of account from which entries are made into control accounts.
(b) State two uses of control accounts.
(c) List four items each which would be recorded on the debit side of: (i) Purchases Ledger Control Account; (ii) Sales Ledger Control Account.
Show the model answer
(a) Any three: sales journal; purchases journal; returns inwards journal; returns outwards journal; cash book; petty cash book; journal proper; bills books.
(b) Any two: help locate errors quickly; check the arithmetical accuracy of the personal ledgers; give total debtors/creditors quickly for interim accounts; aid internal check and reduce fraud.
(c)(i) Purchases ledger control (debit), any four: cash/cheques paid to suppliers; discount received; returns outwards; bills payable; set-off/contra with sales ledger; closing credit balance c/d; opening debit balance.
(ii) Sales ledger control (debit), any four: opening debit balance; credit sales; dishonoured cheques; bills receivable dishonoured; interest charged on overdue accounts; refunds to customers; closing credit balance c/d.
Control accounts are fed from totals in the books of original entry.