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Accounting reconciliations

Control account reconciliations

1.1 Overview

 Control accounts are nominal ledger accounts that summarise a large number
of transactions. As such they are part of the double-entry system.

 They are used to prove the accuracy of the ledger accounting system.

 They are mainly used with regard to receivables – trade receivables ledger
control account and with regard to payables – trade payables ledger control
account.

When an entity transfers the daily total of the sales day book into the nominal ledger
the double-entry is:

Dr Trade receivables ledger control account

Cr Sales revenue

When an entity transfers the daily total of the purchase daybook into the nominal
ledger the double-entry is:

Dr Purchases

Cr Trade payables ledger control account

At the same time most entities will maintain what are often referred to as
‘memorandum accounts’. This is a separate list of individual receivable and payable
amounts due from or to customers or suppliers respectively.

Tutor notes guidance – discussion points

Take students through the illustrative control accounts from chapter 14
pointing out the key items included within each, particularly contra entries
between the two control accounts.

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