Debtors And Creditors Lists And Control Accounts.

Question 1

Explain the purpose of the creditors and debtors control accounts.

Answer 1

The lists of creditors and debtors are used to check the correctness of the transactions with creditors and debtors.

• The list of creditors are compared with the creditors control accounts.
• The list of debtors are compared with the debtors control accounts.

Question 2

Explain the nature of both the control accounts.

Answer 2

• Debtors control account is the account that summarise all the transactions with debtors who buy on credit.
• Creditors control account is the account that summarises all the transactions of the business with creditors or suppliers on credit.

Question 3

Explain the Purpose of both control accounts.

Answer 3

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

Question 4

Explain the advantages of both the control accounts.

Answer 4

• It enables errors to be traced down to the ledger that does not balance. Therefore there is no need to check all the books in full to find the error.
• Having control accounts make it more difficult to disguise fraud.
• They provide immediate totals of debtors and creditors for inclusion in the trial balance.

Question 5

Define the term ‘Debtors control account’.

Answer 5

The account that summarise all the transactions with debtors or customers who buy on credit.

Question 6

Define the term ‘Creditors control account’.

Answer 6

The account that summarises all the transactions with creditors or suppliers on credit.