3 Control Accounts Questions

by Sameera
(Mauritius)

Q: (1) Explain the ways in which control accounts can be of use to the management of a business.

(2) Outline the usefulness of these accounts.

(3) State why a sales ledger control account may have both a debit and a credit closing balance.


A: (1) Management uses control accounts to reduce input errors. The accountant or bookkeeper compares the totals in the control accounts to the totals of all the individual accounts in the debtors and creditors ledgers.

(2) Same as above. For example, the balance in the debtor control account should match the total of all individual debtor accounts in the debtors ledger. This lack of discrepancy between the two indicates that there are probably no errors in these accounts.

(3) A "sales ledger control account" is the same as the debtors control account. It's essentially a control account to compare against your debtors ledger.

Since this is the total of one's debtors, and debtors are assets, it normally has a debit balance.

A credit balance is highly unlikely. However, this could occur if there was an error or if you owed one of your debtors for something. In other words, usually they might be debtors in your records as they owe you for sales you regularly make to them, but maybe you bought something from them for once and so actually owe them. This would then create a credit balance and their account should actually be classified as a creditor or liability (debt account).

Best,
Michael Celender


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