In the General Ledger there are two important accounts

  • Sales Ledger Control Account
  • Purchase Ledger Control Account

Why do we have Control Accounts?

Control accounts give a summary of all the individual accounts that are in the sales and purchases ledger. It provides a nice total which can be used in the statement of financial position. In addition it is a double check to ensure we have not made an error or any fraud has taken place.

What is the Sales Ledger Control Account?

The sales ledger control account is a total for the trade receivables. It will therefore act very similarly to the trade receivable account which is an asset account so will increase on the debit side.

On the debit side there will usually be:

  • Typically the brought down will be on the debit side
  • Credit sales
  • Dishounered cheques
  • Any interest charged to trade receivable

On the credit side there will usually be:

  • Cash or cheques received by trade receivable
  • Discounts allowed by the business
  • Any Irrecoverable debts written off by the business
  • Contra
  • Typically the Carry down

What is the Purchase Ledger Control Account?

The purchase ledger control account is a total for the trade payable. It will therefore act very similarly to the trade payable account which is a liability account so will increase on the credit side.

On the debit side there will usually be:

  • Cheques/cash we have paid to trade payables
  • Cash discounts we have received as a business
  • Purchases we have returned
  • Contra
  • Typically the carry down

On the credit side there will usually be:

  • Typically the brought down
  • Credit purchases
  • Interest charged by trade payable

What is contra?

Contra is used when a person is both a trade receivable and a trade payable

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