fa 2 chapter 1 control accounts

7/23/2019 FA 2 Chapter 1 Control Accounts

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Financial Accounting 2

Control Accounts


2/19

BM020-3-1 FA2 Control Accounts

Learning Outcomes

To define control accounts

The purpose of control accounts. The main types of control accounts.

lide 2 of 1!


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"ses of Control Accounts

A control account is so called #ecause it controls asection of the led$er.

For e%ample& a sales led$er control account controlsthe sales led$er' a purchase led$er controls thepurchase led$er.

(f there is a difference on the trial #alance& the control

accounts )ill sho) )hether or not any of thedifference is in the sales or purchase led$ers.

Control accounts are *ept in the $eneral led$er.

lide 3 of 1!


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+urpose of Control accounts

To act as independent chec*s on the arithmeticalaccuracy of the #alances in the sales and purchaseled$ers.

An added ad,anta$e of *eepin$ control accounts inthat they can act as mini trial #alances& since theyare summary accounts.

To identify led$ers in )hich errors ha,e #een made)hen there is a difference on a trial #alance.

lide of 1!


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+urpose of Control accounts

cont/

To act as an independent internal chec*

on the )or* of the sales purchase

led$er cler*s& to detect errors or fraud.

uties should #e di,ided )here the person

*eepin$ the sales or purchase led$ers )ill

not ha,e access to the control account in

the $eneral led$er.

lide of 1!


6/19


Form of ales Control Account

ales ay Boo*ales 4ournal

Sales ledger

(customers account)

General ledgers

Sales ledger control

accountSales account

lide 5 of 1!


7/19BM020-3-1 FA2 Control Accounts

Sales Ledger Control Accounte#tors Control Account/

Sales ledgerAli Baba

ChewElan

Jan 8 Sales 1600 Jan 15 Sales 2500

Jan 19 Sales 1000 Jan 26 Sales 3500

lide 6 of 1!



7eneral led$er

Sales Account

Jan 31 Credit sales for

month 8,600

lide 8 of 1!



7eneral led$er

Sales Ledger Control Account

209

Jan 1 Balan!e b"d 1,600

Jan 31 Sales 8,60010,200

#eb 1 Balan!e b"d 10,200

209

Jan 31 Balan!e !"d 10,200 10,200

lide ! of 1!



Sales Ledger Control

Jan 1 Balan!e b"d $$$$

Jan 31 Sales da% boo& $$$$$

'total of sales in(oi!ed in the

)eriod

$$$$$

Jan 31 *et+rns inwards a% Boo&

'total of all -oods ret+rned from

debtors in the )eriod. $$$

Jan 31 Cash boo& $$$

'total of all !ash re!ei(ed fromdebtors in the )eriod.

Jan 31 Cash boo& $$$

'total of all !he/+es re!ei(ed from

debtors in the )eriod.

Jan 31 Balan!e !"d $$$

$$$$$

lide 10 of 1!



9%ample 1 of ales :ed$er Control Account

Debit balances on 1 January 20! 1"!#

$otal credit sales %or t&e mont& 102!0C&e'ues receied %rom customers in t&e mont& 2"#

Cas& receied %rom customers in t&e mont& 12*+

,eturns in-ards %rom customers during t&e mont& 2!+

Debit balances on *1 January as e.tracted

%rom t&e sales ledger **+"Sales ledger control

209

Jan 1 Balan!es b"d 189

Jan 31 Sales 10290

1218

209

Jan 31 Ban& 28

Jan 31 Cash 1236

Jan 31 *et+rn nwards 296

Jan 31 Balan!es !"d 3368

1218

lide 11 of 1!



(nformation for sales led$er

control account

/.&ibit 21 ource of information for sales led$er control accountlide 12 of 1!



Form of +urchase Control Account

urc&ase Day oo34urc&ase Journal

urc&ase ledger

(creditors account)

General ledgers

urc&ases Ledger control

account

urc&ases account

lide 13 of 1!



+urchase :ed$er control account

$&e total creditors account is also

re%erred to as t&e urc&ase ledger

control account

$&e credit balance in t&is account in t&e

general ledger must al-ays be e'ual to

t&e total o% t&e credit balances o% t&e

indiidual creditors accounts in t&e5urc&ases ledger at a 5articular 5oint in

time

lide 1 of 1!


15/19BM020-3-1 FA2Control Accounts

+urchase :ed$er Control Account

urc&ase ledgerSow Bob

*ama om

Jan 3 4+r!hases 1,500 Jan 10 4+r!hases ,500

Jan 18 4+r!hases 10,000 Jan 21 4+r!hases ,000

lide 1 of 1!


16/19BM020-3-1 FA2Control Accounts

General ledger

urc&ase Ledger control account

209

Jan 31 Balan!e !"d 23,000

23,000

209

Jan 1 Balan!e b"d 3,000

Jan 31 4+r!hases 20,000

23,000

urc&ases account

Jan *1 Sundry creditors 206000

lide 15 of 1!



(nformation for purchases led$er

control account

/.&ibit 22 ource of information for purchases led$er control accountlide 16 of 1!


18/19BM020-3-1 FA2 Control Accounts lide 18 of 1!

Q & A

Question and Answer Session


19/19

Control Accounts lid 1! f 1!

Errors and Adjustment

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fa 2 chapter 1 control accounts

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