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Control Accounts | O Level Accounting 7707 & IGCSE Accounting 0452 | Detailed Free Notes To Score An A Star (A*)

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  • It provides a memorandum for the transactions
    • Sales ledger control account
      • A combine account for all debtors
      • Only has transactions that show in account of a debtor
      • So no cash sales
      • Also called accounts receivable control account
    • Purchase ledger control account
      • Creditors control account
      • Accounts payable control account
      • A combine for all creditors
      • No cash purchases
      • Only transactions that show in accounts of creditors
  • Items that come in different parts of sales ledger control account
    • Opening balance debit side
    • Credit sales debit
    • Return inwards credit
    • Bad debts credit
    • Bad debt recovered debit
    • discount allowed credit
    • Interest received on overdue debtors debit
    • Set off credit/ contra credit
    • Closing balance will show on credit side / debit balance
  • Items that show in purchase ledger control account
    • Opening balance credit side
    • Credit purchase credit side
    • Return outwards debit side
    • Bank/ cash paid by creditors debit
    • Discount received debit
    • Interest charged by creditors on credit
    • Closing balance will show on debit side (credit balance)
    • Contra entry on debit side
  • Contra entry
    • If I have to pay you 100 rupees for credit purchases
    • and you have to pay me 100 rupees for credit sales, so there is no need to first I give you money then you give it back. Instead, we just pass contra entry
      • We credit the sale ledger control account which reduces debtors by 100
      • We debit the purchase ledger control account to reduce the creditors by 100
    • That solves the issue
    • It happens when we buy from the same business/ person, and sell to the same business person
    • Creditors debit
      • Debtors credit
  • Benefits
    • Accuracy of ledger accounts
    • Errors in trial balance noted and their source in ledger noted
    • Provide the remaining debtor or creditor balance
    • Fraud and deception becomes hard
    • Missing figures can be calculated by simple algebra
  • Problems
    • Can gave errors in them when data is entered incorrectly
    • Same person preparing individual and control accounts can still do fraud
    • Only focus on debtors and creditors
Hunain Zia

Hunain Zia has previously achieved considerable success in the high-school educational stream, gaining a massive 154 Total A Grades and 7 Major Distinctions, a process in which he broke/ set 11 different world records, including the most A grades ever achieved, most subjects ever appeared in, most distinctions, gaining distinctions across two separate boards (Pearson Edexcel and CAIE) within the same year/ ever, and even 19 hours of constant examination. All records stand intact today. Hunain pursued his Honors Accounting Degree from the prestigious Bentley University, and then completed an LLB (in Honors) from University of London. Currently, he manages multiple social and commercial projects, has founded digital streams and works tirelessly in the education sector.

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