A control account is a summary account in the general ledger. It can also be referred to as an adjustment account or controlling account. The control account keeps the general ledger clean of details, but contains the correct balances used for preparing a company’s financial statements.

What is the relationship between controlling account and subsidiary ledger?

A general ledger controlling account represents a summary of transactions recorded in a subsidiary ledger. In turn, a subsidiary ledger is a means to document the individual transactions that make up the general ledger controlling account balance.

What are the two control accounts?

There are two main types of control accounts: (i) Sales ledger (Receivables) control Account – also called total debtors.

What is the purpose of subsidiary ledgers?

A subsidiary ledger stores the details for a general ledger control account. Once information has been recorded in a subsidiary ledger, it is periodically summarized and posted to a control account in the general ledger, which in turn is used to construct the financial statements of a company.

Why is it called a control account?

If every single account was included in the general ledger, it would be very large, unorganized, and difficult to use. The general ledger account that sums the subsidiary accounts is said to control the balances that are reported in the ledger. Thus, we call it a controlling account.

What are the reasons for preparing control accounts?

Advantages of Control Accounts

• Provides a checking mechanism to detect errors and fraud at an early stage;
• Removes bulky details from the general ledger;
• Larger companies can set up accounting departments for specific areas;
• Trial balance figures provide a summary of totals, rather than individual accounts;

What is the difference between a subsidiary ledger and a general ledger?

General ledger and sub ledger are such accounts that record business transactions. The key difference between general ledger and sub ledger is that while general ledger is the set of master accounts where transactions are recorded, sub ledger is an intermediary set of accounts that are linked to the general ledger.