control accounts

Question 1

Why do we need control accounts

Answer 1

-if the trial balance fails to balance and the error cannot be located,it’s necessary to check all the accounting records.this can take a long amount of time.
-this process can be speeded up of a control account is prepared

Question 2

what errors are not revealed in a control account

Answer 2

omission and commission

Question 3

Name 6 advantages of a control accounts

Answer 3

1-they can assist in locating errors when the trial balance fails to balance
2-they are proof of the arithmetical accuracy of the ledgers they control
3-the balances on these accounts are regarded as being equal To the total of the trade receivables from the total of the trip, so this information is available immediately
4-Draft financial statements can be prepared quickly because of the balances provided by the control account
5-They help to reduce fraud as a control account to prepare by someone who has not been involved in making the entries in those particular ledgers
6-They provide a summary of transactions affecting the trade receivables enjoyed payables for each financial period

Question 4

What’s a sales ledger control account

Answer 4

A sales ledger control account is an account summarising all the accounts of the trade receivables

Question 5

What’s a purchase ledger control account

Answer 5

A purchase ledger control account is an account summarising all the accounts of the trade payables

Question 6

Why would a credit customers account show a credit balance

Answer 6

-an overpayment by the customer
-the customer returns goods after paying the account
-the customer pays in advance for the goods
-cash discount not being deducted before payment was made

Question 7

Why would a credit supplier account show debit balance

Answer 7

-an overpayment to the supplier
-returning goods to the supplier after paying the account
-paying the supplier in advance for the goods
-cash discount being deducted before payment was made