14. Control account reconciliations Flashcards
What is a control account?
A control account is a general ledger account that summarises a large number of transactions.
What is a memorandum?
A list of individual receive able and payable amounts per customer.
What is a contra entry?
How is this thus posted?
Occurs when a customer is also a supplier - the balances are thus balanced against each other.
Dr payables
Cr receivables
What are the reasons for a credit balance on the receivables ledger? (3)
How do you correct this in terms of posting?
- The customer has overpaid
- Credit note for fully-paid goods
- Payment received in advance of raising invoices
Dr receivables
Cr payables
Why do we use control accounts?
As a precautionary method to ensure entries in the ledger accounts agree to those in the control account.
What is the purpose of a supplier statement?
Why do we reconcile them? (3)
To ensure the amount outstanding is accurate.
- To prevent over/underpayment
- To check accuracy of information
- To determine which invoices need paying and when
