7. Control Accounts Flashcards
What is a control account?
An account in the SFP which, when all transactions are settled, would have a nil balance (e.g. receivables and payables)
What is a memorandum ledger?
Ledgers containing all transactions by line from the sales, purchases and cash day books showing how much is owed from each individual customer/to each supplier
Do cash transactions appear in memorandum accounts?
No
What is a contra?
An entry in the ledger which cancels out, or ‘contras’ an opposite entry in another or the same ledger - made when we owe money to a supplier and they also owe money to us
What is the double entry for a contra of £200?
Dr Payables £200
Cr Receivables £200
What is the double entry made to clear bad debt from the receivables control account?
Dr Bad and Doubtful Debt expense
Cr Receivables control
How is a sale shown on the receivables control account?
Debit
How is a customer refund shown on the receivables control account?
Debit
How is a dishonored cheque shown on the receivables control account?
Debit
How is cash received shown on the receivables control account?
Credit
How are sales returns shown on the receivables control account?
Credit
How is irrecoverable debt shown on the receivables control account?
Credit
How is a contra shown on the receivables control account?
Credit
How is a purchase shown on the payables control account?
Credit
How is a supplier refund shown on the payables control account?
Credit
How is a cash payment shown on the payables control account?
Debit
How is a purchase return shown on the payables control account?
Debit
How are discounts received shown on the payables control account?
Debit
How is a contra shown on the payables control account?
Debit
Will a casting error in the daybook cause a difference between the amount in the control account and the memorandum account?
Yes
Will a total from the book of prime entry posted to the wrong account in the nominal ledger be detected in reconciliation?
Yes - correct entries will have been made in the memorandum account
Will a transaction recorded in the wrong customer/supplier account be detected in reconciliation?
No
