Control Account Concepts

What is the purpose of control accounts in accounting?

• Control accounts are used to track personal expenses

• The purpose of control accounts in accounting is to summarize the balances of related subsidiary accounts in one place for easier monitoring and analysis.

• Control accounts are only relevant for small businesses

• Control accounts are not necessary in accounting

Explain the reconciliation process for control accounts.

• Reconciliation process is not necessary

• Only compare the general ledger control account balance

• Compare the general ledger control account balance with the total of individual ledger account balances, investigate and correct any discrepancies.

• Correct discrepancies without investigation

Where can you find the sources of information needed to prepare a sales ledger control account?

• Sales invoices, receipts, credit notes, and bank statements

• Inventory reports, production schedules, customer complaints

• Payroll records, employee contracts, tax returns

• Purchase orders, delivery notes, supplier invoices

How can you reconcile the purchases ledger control account with the general ledger?

• Check the sales ledger control account instead

• Ignore the balances and move on

• Ask a colleague to do it for you

• Compare the total balance of the purchases ledger control account with the total balance of the corresponding general ledger account.

What are the potential errors that can occur when using control accounts?

• Calculation errors

• Data corruption

• System crashes

• Incorrect postings, missing entries, duplicate entries, transposition errors, errors in the opening balances

What role do control accounts play in detecting errors in the accounting records?

• Control accounts are used for recording daily transactions

• Control accounts help in detecting errors by comparing the total balance in the control account with the sum of balances in individual subsidiary accounts.

• Control accounts are only used in manual accounting systems

• Control accounts are not helpful in identifying errors

Beginning and ending of a receivable balance were #8,000 and #15,000 respectively. If collections from customers during the period were #36,000, then total sales on account would be

• #36,000

• #23,000

• #29,000

• #43,000

Sales and purchases ledger is used in a business to keep records of?

          

•     current liabilities and long term liabilities

•    current assets and fixed assets

            

•  accounts of individual customers and suppliers

            

•    the owner's capital and cash transactions

             B.     

Debtors Control Account is kept in the 

          

•   sales ledger

            

• nominal ledger

            

• personal ledger

      

• general ledger

What is the credit sales ?

•           530,000

     

• 370,000

            

• 350,000

        

•     330,000