Accounts textbook

Total accounts

Control accounts are prepared for the (sales ledger/has accounts of debtors) (purchases ledger/has
accounts of creditors)

Control accounts are used for checking the arithmetical accuracy

Advantages
Key terms:
A sales ledger control account is an account summarising all the accounts of the trade receivables

A purchases ledger control account is an account summarising all the accounts of the trade payables

Advantages
1. Assist in locating errors when the trial balance fails to balance
2. They are proof of the arithmetical accuracy of the ledgers they control
3. The balances on these accounts are regarded as being equal to the total of the trade
receivables and the total of the trade payables, so this information is available immediately
4. Draft financial statements can be prepared quickly because of the balances provided by the
control accounts
5. They help to reduce fraud as the control accounts are prepared by someone who has not
been involved in making the entries in those particular ledgers
6. They provide a summary of the transactions affecting the trade receivables and trade
payables for each financial period