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7/23/2019 FA 2 Chapter 1 Control Accounts
1/19
Financial Accounting 2
Control Accounts
7/23/2019 FA 2 Chapter 1 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!
7/23/2019 FA 2 Chapter 1 Control Accounts
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BM020-3-1 FA2 Control Accounts
"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!
7/23/2019 FA 2 Chapter 1 Control Accounts
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BM020-3-1 FA2 Control Accounts
+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$ers in )hich errors ha,e #een made)hen there is a difference on a trial #alance.
lide of 1!
7/23/2019 FA 2 Chapter 1 Control Accounts
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BM020-3-1 FA2 Control Accounts
+urpose of Control accounts
cont/
To act as an independent internal chec*
on the )or* of the sales purchase
led$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!
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BM020-3-1 FA2 Control Accounts
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!
7/23/2019 FA 2 Chapter 1 Control Accounts
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!
7/23/2019 FA 2 Chapter 1 Control Accounts
8/19BM020-3-1 FA2 Control Accounts
7eneral led$er
Sales Account
Jan 31 Credit sales for
month 8,600
lide 8 of 1!
7/23/2019 FA 2 Chapter 1 Control Accounts
9/19BM020-3-1 FA2 Control Accounts
7eneral led$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!
7/23/2019 FA 2 Chapter 1 Control Accounts
10/19BM020-3-1 FA2 Control Accounts
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!
7/23/2019 FA 2 Chapter 1 Control Accounts
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9%ample 1 of ales :ed$er Control Account
Debit balances on 1 January 20! 1"!#
$otal credit sales %or t&e mont& 102!0C&e'ues receied %rom customers in t&e mont& 2"#
Cas& receied %rom customers in t&e mont& 12*+
,eturns in-ards %rom customers during t&e mont& 2!+
Debit balances on *1 January as e.tracted
%rom t&e sales ledger **+"Sales ledger control
209
Jan 1 Balan!es b"d 189
Jan 31 Sales 10290
1218
209
Jan 31 Ban& 28
Jan 31 Cash 1236
Jan 31 *et+rn nwards 296
Jan 31 Balan!es !"d 3368
1218
lide 11 of 1!
7/23/2019 FA 2 Chapter 1 Control Accounts
12/19BM020-3-1 FA2 Control Accounts
(nformation for sales led$er
control account
/.&ibit 21 ource of information for sales led$er control accountlide 12 of 1!
7/23/2019 FA 2 Chapter 1 Control Accounts
13/19BM020-3-1 FA2 Control Accounts
Form of +urchase Control Account
urc&ase Day oo34urc&ase Journal
urc&ase ledger
(creditors account)
General ledgers
urc&ases Ledger control
account
urc&ases account
lide 13 of 1!
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14/19BM020-3-1 FA2 Control Accounts
+urchase :ed$er control account
$&e total creditors account is also
re%erred to as t&e urc&ase ledger
control account
$&e credit balance in t&is account in t&e
general ledger must al-ays be e'ual to
t&e total o% t&e credit balances o% t&e
indiidual creditors accounts in t&e5urc&ases ledger at a 5articular 5oint in
time
lide 1 of 1!
7/23/2019 FA 2 Chapter 1 Control Accounts
15/19BM020-3-1 FA2Control Accounts
+urchase :ed$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!
7/23/2019 FA 2 Chapter 1 Control Accounts
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!
7/23/2019 FA 2 Chapter 1 Control Accounts
17/19BM020-3-1 FA2 Control Accounts
(nformation for purchases led$er
control account
/.&ibit 22 ource of information for purchases led$er control accountlide 16 of 1!
7/23/2019 FA 2 Chapter 1 Control Accounts
18/19BM020-3-1 FA2 Control Accounts lide 18 of 1!
Q & A
Question and Answer Session
7/23/2019 FA 2 Chapter 1 Control Accounts
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Control Accounts lid 1! f 1!
Errors and Adjustment
What we will cover next