Control Account

Table of contents


Meaning of Control Account

This is a term which is being used in the field of accounting. In this particular case, a sub-ledger is being created instead of a normal ledger. It works for the purpose of simplification of the ledger. The controlling account helps in tracking all the transactions with proper details. This is also being known as an adjustment account or controlling account. General ledger has various accounts in the name of assets and liabilities account. In such cases, it is difficult to carry out accounting tasks. Therefore, it is being essential to make sure that, control accounts are being used for the purpose of achievement of positive results without any issue or trouble arising.

Control accounts are the crucial part of double entry system of accounting within the organization. These are the accounts which are normally being used in large organizations. There are not too many transactions in small organizations therefore, these accounts are not required. Here, all the accounts can be made in one ledger and then, transactions could be carried out. To prepare a trial balance, balance of subsidiary accounts would be taken into consideration for doing the transactions in a proper and appropriate way.

Control accounts do help the organization to make sure that, it is being worked towards double-checking the accuracy of the accounts for doing the analysis in a proper way. The balance of control accounts is being equal to the sum of balances of all the subsidiary accounts. The control account is the sum of all the subsidiary accounts of the organization. It helps in controlling the balances which are being there in the ledger and therefore, these accounts are being termed as control accounts. One of the control accounts is accounts receivable. This account has various accounts of the parties from whom, money is to be obtained. Here, the subsidiary ledger will provide details of each customer and the money which they owe to the company.

Purpose of control account

There are various purposes which are being solved with the help of usage of control accounts by an organization. The purposes of control accounts include the following:

a.       Accuracy checks:  It is essential for an organization to make sure that there is the accuracy of entries in sales and purchases. Control accounts help in ensuring that, a check is being kept on the purchases in a proper way. It is possible that a particular entry is being omitted and figures are being written in a wrong way. In such situations, control accounts come in handy and do help in making sure that, best results are being generated.

b.      Locating the error: Errors are being located in an easy manner with the help of control accounts. These errors are being located at the time when the control accounts are being made on the weekly or monthly basis. If a mistake is being made by a clerk then, it would be difficult to locate the error but with the help of control accounts, it is going to be easier to ensure that, errors are being located in a proper way.

c.       Internal checking: Control accounts are also being used for the purpose of doing the internal check. At the time of preparation of control accounts, a person being involved in the preparation of these accounts will carry out the checks regarding the fact that, whether sales and purchase ledger accounts are being prepared in a proper way or not.

d.      Simple and time-saving: With the help of usage of control accounts, it is going to be easier for the organization to make sure that, balances of debtors and creditors are being identified in a proper and appropriate way. A single balance is being shown in control accounts which is simpler to handle

Types of Control Accounts

                There are mainly two kinds of control accounts. These kinds of control accounts include purchase ledger control account and sales ledger control account. These are being mainly maintained by large organizations as there are large levels of transactions in these accounts. The trial balance is being used for finding out accuracy of the accounts. Control accounts are being used for the purpose of checking the accuracy of purchase and sales ledger.

Sales ledger control account: Sales ledger is the book wherein, all the transactions related to credit sales are being written. The amount which is being owned by the customers is being termed as trade receivables. For controlling the sales ledger, sales ledger control account is being prepared. This kind of control account helps in doing the checks regarding a total of associated ledgers and another ledger. This is a short-term business asset for the organization.

Purchase ledger control account: Purchase ledger is a book of account wherein, purchase related activities are being carried out. For controlling the purchase ledger, purchase ledger control account is being prepared by the organization. This is also being termed as trade payable control account or payable control account. This control account helps in doing the checks regarding associated ledger balance of the organization.

                                                                                Advantages of Control Account


. These accounts are being considered to be useful for the purpose of the formulation of policy by the management.

b.      It is possible to create a single trial balance from general ledger due to the preparation of control accounts.

c.       If a trial balance is being used and it does not match with some error then, control accounts can help the organization to make sure that, proper results are being generated.

d.      It is possible to create profit and loss statement with the help of usage of control accounts.

e.      These accounts help in making the reduction in unnecessary details in the general ledger.

f.        It is possible to have internal check and greater accuracy

g.       It helps in providing the basis for reconciliation of cost and financial accounts.


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