Control accounts

Question 1

Explain the purpose of debtors and creditors lists

Answer 1

The list of debtors and creditors are used to check the correctness of the transactions with debtors and creditors. List of creditors are compared with creditors control acc. List of debtors are compared with debtors with debtors control acc.

Question 2

Explain the nature of both the control accounts

Answer 2

Debtors control: acc that summarises all transaction with debtors or customers who buy on credit.
Creditors control: acc that summarises all transaction of business with creditors or suppliers on credit

Question 3

Explain the purpose of both the control accounts

Answer 3

To check whether all transactions with debtors and creditors have been entered and posted correctly

Question 4

Explain the advantages of both the control accounts

Answer 4

1. ) Enable errors to be traced down to ledger that doesn’t balance. Therefore there’s no need to check all the books in full to find the error
2. ) Having control accounts make it more difficult to disguise fraud
3. ) They provide immediate control of debtors and creditors for inclusion in the trail balance

Question 5

Describe the term debtors control account

Answer 5

Account that summarise all transactions with debtors or customers who buy on credit

Question 6

Describe the term creditors control account

Answer 6

Account that summarise all transactions with creditors or suppliers on credit