Ch 29

F5 PA Control Accounts/LWL

Name : _________________
Class : ______ (
)
S5 Principles of Accounts
Chapter 29
Control Account (
I.

Need for Control Accounts

Before final accounts are prepared, a Trial Balance is drawn up as a test of the
arithmetical accuracy of the accounts. However, if the trial balance totals do not
agree, the Final Accounts cannot be prepared.
Control Accounts are prepared beforehand to check the arithmetical accuracy of
a ledger. There are 2 Control Accounts:

II.

1.

Sales Ledger Control Account (Debtors Control Account), which keeps the
total amount concerning debtors.

2.

Purchases Ledger Control Account (Creditors Control Account), which keeps

the total amount concerning creditors.

Principle of Control Accounts

Look at the following example:
Trial balance as at 31 December 2000
Dr.
Cr.
$
$
Debtors
80,000
Creditors
62,000
From the above 2 figures, the amounts which arrive to debtors and creditors are
actually made up of a number of debtors/creditors. Each persons account closing
balances are added up to come to the total. Therefore, it is easy to make mistakes.
The principle of preparing Control Account is to check whether $80,000 and $62,000
are correct. If the totals of Control Account is equal to Debtors/Creditors totals, it
proves that the amount is correct.

III. Sales Ledger Control Account /Debtors Control Account

A. Sources
All the amounts of the Control Account come from the Day Books concerning
debtors. The amounts represent the TOTAL in the year.
B. Format
Sales Ledger Control Account/Debtors Control Account
Balance b/d (Opening Bal.)
Credit Sales
Dishonoured Cheque
Interest charged on overdue
Account

______
xxx

Cash/Cheque received from Debtors

Returns Inwards
Discounts Allowed
Bad Debts
Set off against Purchases Ledger Control
Account/Creditors Control A/C
Balance c/d (Closing Bal.)
_____
xxx

Ch 29

F5 PA Control Accounts/LWL

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IV. Purchases Ledger Control Account/Creditors Control Account

A. Sources
All the amounts of the Control Account come from the Day Books concerning
creditors. The amounts represent the TOTAL in the year.
B. Format
Purchases Ledger Control Account/Creditors Control Account
Cash/Cheque paid to Creditors
Returns Outwards
Discounts Received
Set off against Sales Ledger
Control Account/Debtors
Control Account
Balance c/d (Closing Bal.)
______
xxx
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V.

Balance b/d (Opening Bal.)

Credit Purchases

______
xxx
===

Adjustment between Control Account and Personal Ledger

If the totals of Control Account is different from the totals of Individual Personal
Accounts, adjustments have to be made to correct the error. The principles are as
follows:
1.

Errors in Control Account

Correct Control Account

2.

Errors in Day Books

Correct Control Account

3.

Errors in Individual Debtors/

Creditors Accounts

Correct Personal Ledger Account

4.

Omission of an entry

Correct BOTH Accounts

5.

Errors in both accounts

accounts

Correct BOTH Accounts