Control Accounts Flashcards
What is a Control a/c also known as?
A total account
What ledgers do we use a control a/c for?
Receivable and Payables
What are the purposes of a control a/c?
Check accuracy, find mistakes, get total values for TR and TP, check work of accounts clerk
What do we mean when we say that a control a/c is a memorandum a/c?
it is not part of the double entry system… it is only a side account for our own records
What type of account is a Receivables Ledger control a/c?
Asset
What type of account is a Payables Ledger control a/c?
Liability
What is a Bad Debt? What Control a/c is this recorded in and on what side?
Customer not paying you so you write it off… Receivables Ledger Control a/c… Cr side (reducing the asset)
How do we show a Bad Debt that’s been recovered in the Control a/c?
Receivables LCA… reinstate the debt (DR) and then show payment (CR)
How do we deal with refunds in each Control a/c?
RLCA - Dr; PLCA - Cr
Control a/cs - Whats is a contra entry? How do we record it in the Control a/cs?
It’s when someone is both a credit customer and a credit supplier… ALWAYS REDUCES THE A/C IT GOES IN
Where do the values come from for the control accounts?
The Books of Prime Entry
How do we check the accuracy of the control accounts
Check the Balance of the Control a/c against the TR or TP list (i.e. total of individual balances)
What is the main limitation of Control accounts
Doesn’t detect all errors e.g. Ommission. Also doesn’t pinpoint errors.
Why might there be a small balance on the Cr side of a RLCA or on the Dr side of the PLCA?
overpayment of what was owed OR returned something after paying for it.
What is meant by a (Trade) Receivables List?
A list of the balances of all your TRs from the Receivables Ledger
What is meant by a (Trade) Payables List?
A list of the balances of all your TPs from the Payables Ledger
