Suppose the closing balance of the accounts payable in the control account prepared with accumulated balances is the same as the total accounts payable balance in the general ledger. In that case, our confidence in the closing balance increases as these are reconciled.
However, sometimes there can be no match between the closing balance in the control account and the total of the party-wise accounts. In this case, there are three possibilities of errors that include the following. Similarly, all the entries regarding credit sales are posted in the account receivable ledger, along with sales returns and discounts allowed. To ensure accuracy of the ending balance for accounts receivables, we obtain accumulated figures for the credit sales, cash received, sales return, and discount allowed to construct the control account.
So, the control account equalizes all subsidiary accounts, and it helps simplify and organize general ledger account. Once we have reconciled the balance of accounts receivables in the general ledger with accumulated movement of the accounts receivable control account , we can reliably use the ending balance to prepare financial statements.
Usually, companies generate two types of control accounts: sales ledger control accounts and payable ledger control accounts. The reason for these control account preparation is that there are more transactions in these account balances, and chances of error are higher as well. Sales ledger control account is also known as debtor control account or Trade debtor control account. It explicits total trade debtors of a business entity at a specific given period.
Further, it elaborates the total amount owed by all customers in a given time frame. It serves the purpose of the reconciliation that increases our confidence in the ending balance of accounts receivables. Following are the accumulated balances of the figures that impact the ending balance of accounts receivables. Solution: First of all, let's make sure we understand …. Creditors control balance on 30 April was 42, How do I determine the effectiveness of the internal control system with regards to debtors?
What are the strategies that I can implement …. General Ledger Exercise The following balances are available from the books of Frema, a sole trader: Balances as at 1st July, - Dr. Balances in …. What is a Folio? Q: What is a folio? A: It's a cross-referencing code, usually a number or a few numbers and letters. It connects two separate records, such as …. Side and General Ledger Account Discount Q: Which one of the following alternatives represents the side and general ledger account to which the total of the discount column in the cash payments ….
Credit Balance in Purchases Ledger? Q: I was solving an exercise of control accounts in which one of the transactions given was this: Credit balance in purchases ledger transferred from …. Bad Debts Recovered Q: 1. Is recovery of bad debts included in the control accounts? Once a debt is written off as a bad debt, when it is recovered, do we debit it …. However the company who paid him the money as a payment on account, ….
Debtors and Creditors Ledger Question Before you begin: It's important for testing and exams to make sure you not only answer questions correctly but also completed them at the right speed. We opened the discussion with the finance …. Debtors and Creditors Control Accounts Exercise Before you begin: It's important when preparing for tests and exams to make sure you not only answer questions correctly but also do so at the right …. What journals must I use? Which ledger account will be affected by this ….
AND What are the reasons to maintain control accounts? Kindly answer in …. Carriage Inward included in Creditor's Control Account? Q: Is carriage inward included in the control account? And if so, on what side? A: No, carriage inward is an expense on its own and would be recorded …. Provision for Doubtful Debts Q: Hi! A provision for doubtful debts is created …. A: Carl, I assume your question is regarding imbalances between debtor or creditor ….
A: I assume you mean which journal debtor receipts should be recorded in. If so, receipts from debtors are recorded …. Does the provision for doubtful debts go into the sales control account? Q: Does the provision for doubtful debts go into the sales control account? Thank you very much! A: The provision for doubtful debts does not go into …. Answer: Let's make sure we fully understand what …. The ending balance in a control account should match the ending total for the related subsidiary ledger.
If the balance does not match, it is possible that a journal entry was made to the control account that was not also made in the subsidiary ledger. If anyone wants to see detailed transactional information for accounts payable or accounts receivable, they can review the detail located in the subsidiary ledger, since it is not located in the general ledger. The typical level of activity in a control account is on a daily basis. For example, all payables entered during one day will be aggregated from the subsidiary ledger and posted as a single summary-level number into the accounts payable control account.
Posting into all control accounts must be completed before the books can be closed at the end of a reporting period ; otherwise, transactions may be stranded in a subsidiary ledger and not be reflected in the financial statements. Control accounts are most commonly used by large organizations, since their transaction volume is very high.
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