Topic 11 Flashcards
What is the purpose of a Control A/C
It provides a double check on the sales and purchases ledger to see if correct entries are made
What goes on the DR side of Sales Ledger Control A/C and state examples
Items which increase the Receivable Amount owed
Opening Bal
Credit Sales
Dishonored CHQ
Discount Allowed (Dishonored CHQ)
What goes on the CR side of a Sales Ledger Control A/C and state examples
Items that reduce receivable amount owed
Cash Received from Receivables CHQs Received from Receivables Discount Allowed Sales Returns Irrecoverable Debts Purchase Ledger Control (Contra) BAL c/d
Where does the amount taken from SLCA go
It should be stated under Current Assets in the S.F.P
What goes on the DR side on a Purchases Ledger Control A/C and state examples
These are items that reduce the trade receivable amount
Cash paid to payables CHQs paid to payables Purchase returns Discount received Sales Ledger Control (Contra) BAL c/d
What goes on a CR side of a Purchase Ledger Control A/C and state examples
Opening Balance Credit Purchase CHQs cancelled to payables Interest charged on overdue accounts CHQs dishonoured by bank Discount received (dishonoured CHQs)
Why are Contra entries made in the Control A/C
Contra entries are made when a business is both a customer and a supplier of another business
State 3 benefits of using Control A/C
- Errors are minimised due to the double carried out every month
- source of errors can be located quickly
- Scope for fraud is reduced
State 3 limitations of using Control A/C
CROPOC errors can still occur.
- Error of Omission if an invoice is mislaid
- Error of Commission if entry made in wrong account
- Error of Original Entry if wrong figure entered
Why may there be a credit balance in the SLCA
There may be a small amount brought down if the customer has overpaid
