3. 10 Control Accounts

Question 1

1. What is a control account?

Answer 1

Control accounts are often referred to as “total accounts”, as they contain the total/summary of various transactions that have taken place during the period,

Question 2

2. What are the two types of control account

Answer 2

• Trade receivables ledger control account
• Trade payables ledger control account

Question 3

3. What is a trade receivables ledger control account?

Answer 3

The trade receivables ledger control account is an account that summarizes the customer accounts in the receivables ledger.

Question 4

4. What is a trade payables ledger control account?

Answer 4

The trade payables ledger control account is an account that summarizes all the credit supplier accounts in the receivables ledger.

Question 5

5. What is an irrecoverable debt?

Answer 5

Irrecoverable debt is when a customer /trade receivable has bought goods on credit but is unable to pay the debt.

Question 6

6. What is contra account?

Answer 6

contra account occurs when the same business is both a supplier and a customer.

Question 7

7. What are the 3 advantages of control account?

Answer 7

• Location of error
• Prevention of fraud
• Information for Management

Question 8

8. What are the 3 disadvantages of control account

Answer 8

• Compensating errors and errors of original entry in business documents will be carried through.
• Error of omission will not be revealed.
• Error of commission will not be revealed.